Gravelle v. Kaba Ilco Corp
ORDER granting in part and denying in part 14 Motion to Dismiss for Failure to State a Claim and Motion to Strike - Plaintiff's first claim is barred by claim preclusion, and defendants' motion to dismiss this claim is granted. The motion to dismiss is denied in remaining part. Defendants' motion to strike is denied. The court declines to enter a prefiling injunction against plaintiff. Signed by District Judge Louise Wood Flanagan on 04/16/2014. (Baker, C.)
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF NORTH CAROLINA
GORDON GRAVELLE o/a CodePro
KABA ILCO CORP., KABA AG, and
KABA HOLDING AG,
This matter is before the court on defendants’ motion to dismiss pursuant to Federal Rule of
Civil Procedure 12(b)(6), and motion to strike pursuant to Rule 12(f)(2) (DE 16). In their motion,
defendants also request entry of a prefiling injunction against plaintiff. Plaintiff has responded and
defendants have replied. Issues raised are ripe for ruling. For the following reasons the court will
grant in part and deny in part defendants’ motion.
STATEMENT OF THE CASE
Plaintiff, proceeding pro se, initiated this matter by filing a motion for leave to proceed in
forma pauperis on September 6, 2013. Pursuant to the court’s order, plaintiff filed a particularized
motion on September 23, 2013. This motion was denied by order entered September 26, 2013.
Plaintiff then paid the requisite filing fee, and filed a complaint against defendant Kaba Ilco Corp.
(“Kaba Ilco”) on October 29, 2013 (DE 9).
That same day, plaintiff filed an amended complaint against defendants Kaba Ilco, Kaba AG,
and Kaba Holding AG (DE 10). Plaintiff’s amended complaint presents four claims, namely: (1)
a request for declaratory relief from this court to the effect that an arbitration agreement alleged to
be between plaintiff and defendant Kaba Ilco was unenforceable; (2) a claim against all defendants
for false advertising in violation of 35 U.S.C. § 292; (3) a claim against all defendants for false
advertising in violation of the Lanham Act, 15 U.S.C. § 1125(a); and (4) a claim against all
defendants for violations of the North Carolina Unfair and Deceptive Trade Practices Act, N.C Gen.
Stat. § 75-1.1 et seq. Defendants filed the instant motion to dismiss plaintiff’s first claim for relief,
and to strike portions of plaintiff’s complaint (DE 16). Therein, defendants also request that the
court enter a prefiling injunction against plaintiff, enjoining him from filing further actions against
defendant Kaba Ilco or related entities seeking to invalidate an arbitration award unless he first
obtains permission from this court.
STATEMENT OF FACTS
The facts as alleged by plaintiff are as follows: Plaintiff, a resident of Ontario, Canada, owns
and operates CodePro Manufacturing (“CodePro”), which is primarily engaged in the business of
creating and selling key cutting machines. Am. Compl. ¶¶ 9-11. In 1998, CodePro began selling
a commercial key cutting machine, the CodePro 4500. Id. ¶ 22. In 2004, defendant Kaba Ilco, a
limited liability North Carolina company, took an interest in the CodePro 4500. Id. ¶ 24. Defendant
Kaba Ilco’s parent companies are Swiss corporations: defendant Kaba AG, and defendant Kaba
Holding, AG. Id. ¶¶ 14-15; see also Def. Kaba Ilco’s Financial Disclosure Statement (DE 13).
Defendant Kaba Ilco is engaged in, among other things, the business of creating and selling key
cutting machines. Am. Compl. ¶ 19.
In 2006, plaintiff and defendant Kaba Ilco entered into an agreement whereby defendant
Kaba Ilco obtained the intellectual property rights to the CodePro 4500. Id. ¶ 25. Pursuant to that
agreement, plaintiff agreed to an eight-year, worldwide non-competition agreement. Id. ¶ 26.
Plaintiff worked as a consultant to defendant Kaba Ilco between 2006 and 2008 to help create a new
key cutting machine, the EZ Code machine. Id. ¶ 30. Relations between plaintiff and defendant
Kaba Ilco deteriorated during this time. Defendant Kaba Ilco refused to pay plaintiff monies owed
under their agreement and induced plaintiff to disclose the name of a third party engineering firm
with whom he had worked in an attempt to interfere with their business relationship. Id. ¶¶ 30-39.
Plaintiff retained counsel, and on April 22, 2008, the parties entered into a settlement
agreement, which included an arbitration agreement. Id. ¶¶ 40-42. In November, 2008, plaintiff
brought a suit in Ontario, Canada, against defendant Kaba Ilco and their general manager, which was
dismissed without prejudice by consent of all parties. Id. ¶¶ 46-48. Plaintiff filed a second suit in
Ontario on September 23, 2010. Id. ¶ 49. This suit was stayed in favor of arbitration after plaintiff
stipulated to same. Id. ¶ 50. The arbitrator held that the noncompetition agreement between plaintiff
and defendant Kaba Ilco was unenforceable, but granted defendant Kaba Ilco’s partial motion to
dismiss other claims by plaintiff. Id. ¶¶ 53-54. Plaintiff filed suit in this court, seeking to vacate the
arbitration award. Id. ¶ 55. This motion was denied by order entered September 16, 2013. See
Gravelle v. Kaba Ilco Corp., No. 5:13-CV-160-FL, 2013 WL 5230355 (E.D.N.C. Sept. 16, 2013).
Plaintiff appealed this order, which was affirmed by the Fourth Circuit Court of Appeals. See
Gravelle v. Kaba Ilco Corp. --- F. App’x ----, 2014 WL 1099771 (4th Cir. Mar. 21, 2014).
Motion to Dismiss
Standard of Review
The purpose of a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which
relief can be granted is to eliminate claims that are factually or legally insufficient. Fed. R. Civ. P.
12(b)(6); Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009); Bell Atl. Corp. v. Twombly, 550 U.S. 544,
570 (2007). A claim is stated if the complaint contains “sufficient factual matter, accepted as true,
to ‘state a claim to relief that is plausible on its face.’” Iqbal, 556 U.S. at 678 (quoting Twombly,
550 U.S. at 570). “Asking for plausible grounds . . . does not impose a probability requirement at
the pleading stage; it simply calls for enough fact to raise a reasonable expectation that discovery
will reveal [the] evidence” required to prove the claim. Twombly, 550 U.S. at 556. Furthermore,
the complaint need not set forth “detailed factual allegations,” but instead must simply “plead
sufficient facts to allow a court, drawing on ‘judicial experience and common sense,’ to infer ‘more
than the mere possibility of misconduct.’” Nemet Chevrolet, Ltd. v. Consumeraffairs.com, Inc., 591
F.3d 250, 256 (4th Cir. 2009) (quoting Iqbal, 556 U.S. at 679).
In evaluating whether a claim is stated, “[the] court accepts all well-pled facts as true and
construes these facts in the light most favorable to the plaintiff,” but does not consider “legal
conclusions, elements of a cause of action, . . . bare assertions devoid of further factual
enhancement[,] . . . unwarranted inferences, unreasonable conclusions, or arguments.” Id. at 255
Defendants contend that plaintiff’s first claim – wherein he seeks a declaration by the court
that an arbitration agreement alleged to be between plaintiff and defendant Kaba Ilco is
unenforceable – must be dismissed as it is barred both by claim preclusion and issue preclusion. A
claim is barred by claim preclusion if there was “‘(1) a final judgment on the merits in a prior suit;
(2) an identity of the cause of action in both the earlier and the later suit; and (3) an identity of
parties or their privies in the two suits.’” Clodfelter v. Republic of Sudan, 720 F.3d 199, 210 (4th
Cir. 2013) (quoting Pueschel v. United States, 369 F.3d 345, 354-55 (4th Cir. 2004)).
Plaintiff previously brought before this court the case of Gravelle v. Kaba Ilco Corp., No.
5:13-CV-160 (“Gravelle I”). The court entered a final judgment on the merits in that case on
September 16, 2013. See Judgment in Gravelle I, (Sept. 16, 2013). In that case, defendant sought,
among other things, a declaration from this court that the arbitration agreement at issue in this case
was unenforceable. See Pl.’s Am. Mot. to Vacate Arbitration Award in Gravelle I, at 2 (Aug. 16.
2013) (“[Plaintiff] again respectfully moves for . . . an Order declaring any agreement to arbitrate
between the parties as void and unenforceable . . . .”). Thus, there is an identify of causes of action
as between that case and plaintiff’s first cause of action in the instant matter. Finally, there is an
identity of parties. Plaintiff in this matter was also the plaintiff in Gravelle I, and defendant Kaba
Ilco was a defendant in Gravelle I. Although defendants Kaba AG and Kaba Holding AG were not
defendants in Gravelle I, they are parents companies of defendant Kaba Ilco. See Def. Kaba Ilco’s
Financial Disclosure Statement (DE 13). Such a relationship is sufficient to establish privity. See
Whitehead v. Viacom, 233 F. Supp. 2d 715, 721 (D. Md. 2002), aff’d sub nom. Whitehead v.
Viacom, Inc., 63 F. App’x 175 (4th Cir. 2003)(relationship of parent and subsidiary is sufficient to
establish privity between parties for purposes of claim preclusion). Thus, plaintiff’s first claim is
barred by claim preclusion, and defendants’ motion to dismiss this claim is granted.1
The court notes that plaintiff’s claim is also barred by issue preclusion.
“A party seeking to rely on the doctrine of collateral estoppel is obliged to establish five elements: (1) that the issue
sought to be precluded is identical to one previously litigated (‘element one’); (2) that the issue was actually determined
in the prior proceeding (‘element two’); (3) that the issue’s determination was a critical and necessary part of the decision
in the prior proceeding (‘element three’); (4) that the prior judgment is final and valid (‘element four’); and (5) that the
party against whom collateral estoppel is asserted had a full and fair opportunity to litigate the issue in the previous
forum (‘element five’).” Westmoreland Coal Co., Inc. v. Sharpe ex rel. Sharpe, 692 F.3d 317, 330 (4th Cir. 2012)
(quotations omitted). All five of these elements are met in the instant case.
Motion to Strike
Standard of Review
Rule 12(f) states that the court “may strike from a pleading an insufficient defense or any
redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). “The purpose of
the motion to strike is to avoid the waste of time and money that arises from litigating unnecessary
issues. The district court possesses considerable discretion in disposing of a Rule 12(f) motion to
strike.” Godfredson v. JBC Legal Group, P.C., 387 F. Supp. 2d 543, 547 (E.D.N.C. 2005) (internal
citations and quotation marks omitted). However, motions to strike are “generally viewed with
disfavor because striking a portion of a pleading is a drastic remedy.” Waste Mgmt. Holdings, Inc.
v. Gilmore, 252 F.3d 316, 347 (4th Cir. 2001) (internal quotations omitted). Therefore, “motions
to strike are rather strictly considered and have often been denied even when literally within the
provisions of Rule 12(f) where there is no showing of prejudicial harm to the moving party.”
Godfredson, 387 F.Supp. 2d at 547-48. Furthermore, when considering a motion to strike against
a pro se litigant, the court does not hold such litigant to “the same stringent standards as attorneys.”
Sawyer v. Potash Corp. of Saskatchewan, 417 F.Supp.2d 730, 738 (E.D.N.C. 2006).
Defendants move to strike paragraphs 22-56, 73-82, 99-102, and 103(E) of plaintiff’s
amended complaint. In paragraphs 22-56, plaintiff discusses his alleged past business relationship
with defendants, and their previous legal battles. Plaintiff characterizes defendants’ actions over the
course of this relationship as – among other things – corrupt, unethical, unlawful, wanton, and
amounting to extortion and fraudulent inducement. See Am. Compl. ¶¶ 22-56. In paragraphs 73-82
there are allegations by plaintiff that his own financial situation is quite bleak. Id. ¶¶ 76-78. In
paragraphs 99-102 and 103(E) plaintiff discusses the alleged size and wealth of defendants and
asserts that defendants’ employees have violated defendants’ code of conduct. Id. ¶¶ 99-102,
Defendants argue that these statements are immaterial to the case at hand if plaintiff’s
first claim is dismissed. However, other than conclusory assertions that these statements may
prejudice defendants if not stricken, there is no showing as to how such prejudice would accrue to
them. Should the case proceed to trial, the complaint will not be presented to the jury. Defendants
may also be assured that the court will not consider material which is irrelevant to plaintiff’s causes
of action. Thus, because “striking a portion of a pleading is a drastic remedy,” Waste Mgmt., 252
F.3d at 347, in the absence of a showing of actual prejudice from this material filed by a pro se
litigant, defendants’ motion to strike is denied.
Motion for Prefiling Injunction
Defendants finally request that this court enter a prefiling injunction against plaintiff,
requiring him to obtain permission from this court prior to filing another action against defendant
Kaba Ilco or its related entities seeking to invalidate the arbitrator’s award.
In determining whether a prefiling injunction is substantively warranted, a court must
weigh all the relevant circumstances, including (1) the party’s history of litigation,
in particular whether he has filed vexatious, harassing, or duplicative lawsuits; (2)
whether the party had a good faith basis for pursuing the litigation, or simply
intended to harass; (3) the extent of the burden on the courts and other parties
resulting from the party;s filings; and (4) the adequacy of alternative sanctions.
Cromer v. Kraft Foods N. Am., Inc., 390 F.3d 812, 818 (4th Cir. 2004). Imposition of a prefiling
injunction is a “drastic remedy” which “must be used sparingly.” Id. at 817.
Thus, a judge should not in any way limit a litigant’s access to the courts absent
exigent circumstances, such as a litigant’s continuous abuse of the judicial process
by filing meritless and repetitive actions. Indeed, use of such measures against a pro
se plaintiff should be approached with particular caution and should remain very
much the exception to the general rule of free access to the courts.
Id. at 817-18 (internal quotations omitted).
Here, the court does not find that exigent circumstances compel such a drastic remedy as
entry of a prefiling injunction against this pro se plaintiff. While the court finds that plaintiff’s
request for a declaratory judgment is repetitive of relief sought in Gravelle I and barred by the
judgment in that case, it declines to enter a prefiling injunction against plaintiff based on this finding
Based upon the foregoing, the court GRANTS IN PART defendants’ motion where they
move to dismiss plaintiff’s first claim, and DENIES IN REMAINING PART the motion.
SO ORDERED, this the 16th day of April, 2014.
LOUISE W. FLANAGAN
United States District Court Judge
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