Gritzuk v. GCA Education Services Inc et al
Filing
35
ORDER denying 18 Motion to Change Venue. Signed by Honorable Patrick Michael Duffy on August 30, 2016.(jmcg, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
CHARLESTON DIVISION
Stephen Gritzuk,
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)
Plaintiff,
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)
v.
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GCA Education Services, Inc., GCA
)
Services Group, Inc., and Erie Acquisition )
Holdings, Inc.,
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)
Defendants.
)
____________________________________)
C.A. No.: 2:16-cv-1076-PMD
ORDER
This matter is before the Court on Defendants GCA Education Services, Inc. and GCA
Services Group, Inc.’s (collectively “GCA”) joint motion to transfer (ECF No. 18). For the
reasons set forth herein, GCA’s motion is denied.
BACKGROUND
This action arises out of a dispute over non-compete provisions contained in Plaintiff
Stephen Gritzuk’s employment agreement with GCA Services Group, Inc. and in his stock
option agreement with Defendant Erie Acquisition Holdings, Inc. GCA is in the business of
providing custodial and facilities management services. Gritzuk, a South Carolina resident,
worked for GCA in operations and facilities management for specific sites in the educational
sector, and he assisted with GCA’s sales in that sector as well.
In early July 2015, Gritzuk notified GCA that he intended to resign. After working two
more weeks for GCA, he resigned on July 23. After his resignation, Gritzuk was hired by
Harvard Maintenance, Inc., which is also in the business of providing facilities management
services. Gritzuk alleges that his employment with Harvard Maintenance does not involve any
work in educational sector facilities.
In February 2016, Gritzuk received a letter from an attorney representing GCA stating
that his employment with Harvard Maintenance violated the terms of his employment and stock
option agreements. In this action, Gritzuk seeks a declaratory judgment that the provisions at
issue are invalid and that he need not terminate or modify his employment at Harvard
Maintenance.
PROCEDURAL HISTORY
Defendants removed this case on April 7, 2016. A week later, Erie filed a motion to
dismiss for lack of personal jurisdiction. Gritzuk responded on May 2, and Erie replied on May
12. Then, on May 17, GCA filed a motion to transfer, to which Gritzuk responded on June 3.
GCA filed a reply on June 13. The Court issued an order on June 28 granting Erie’s motion to
dismiss for lack of personal jurisdiction and requesting supplemental briefing on GCA’s motion
to transfer. Gritzuk filed his supplemental brief on July 5 and GCA filed their supplemental brief
on July 6. Both sides filed their responses on July 11. Accordingly, this matter is now ripe for
consideration.
LEGAL STANDARD
“Rule 19 of the Federal Rules of Civil Procedure sets forth a two-step inquiry for courts
to determine whether a party is necessary and indispensable.” Home Buyers Warranty Corp. v.
Hanna, 750 F.3d 427, 433 (4th Cir. 2014) (internal quotation marks omitted). “The first question
under Rule 19(a) is whether a party is necessary to a proceeding because of its relationship to the
matter under consideration.” Id. (quoting Teamsters Local Union No. 171 v. Keal Driveaway
Co., 173 F.3d 915, 917 (4th Cir. 1999) (internal quotation marks omitted)). “Second, if the party
is necessary . . . the court must decide under Rule 19(b) whether the proceeding can continue in
that party’s absence.” Id. (quoting Keal, 173 F.3d at 917–18 (internal quotation marks omitted)).
“Rule 19 is not to be applied as a ‘procedural formula.’”
Id. (quoting Provident
Tradesman Bank & Trust Co. v. Patterson, 390 U.S. 102, 119 n.16 (1968)). “Decisions must be
made pragmatically, in the context of the substance of each case.” Id. (quoting Patterson, 390
U.S. at 199 n.16) (internal quotation marks omitted). Additionally, “courts must take into
account the possible prejudice ‘to all parties, including those not before it.’” Id. (quoting
Owens–Ill., Inc. v. Meade, 186 F.3d 435, 441 (4th Cir. 1999)). “While dismissal of a case is a
‘drastic remedy that should be employed only sparingly,’ it is required if a non-joined party is
both necessary and indispensable.” Id. (quoting Keal, 173 F.3d at 918).
DISCUSSION
Before addressing GCA’s motion to transfer, the Court must examine whether this case
can continue in Erie’s absence. The Court notes at the outset that this case does not present a
prototypical Rule 19 issue. Here, all three relevant parties were initially a part of the current
litigation. However, Erie thereafter moved to dismiss for lack of personal jurisdiction, and the
Court granted that motion. As a result of Erie’s dismissal, the Court became concerned that there
might be an indispensable-party issue pursuant to Rule 19. See Republic of Philippines v.
Pimentel, 553 U.S. 851, 861 (2008) (“A court with proper jurisdiction may also consider sua
sponte the absence of a required person and dismiss for failure to join.”).
Because Erie cannot be joined, the Court must first determine whether Erie is a necessary
party. The advisory committee’s notes to Rule 19 emphasize:
the desirability of joining those persons in whose absence the court would be
obliged to grant partial or ‘hollow’ rather than complete relief to the parties before
the court. The interests that are being furthered here are not only those of the
parties, but also that of the public in avoiding repeated lawsuits on the same
essential subject matter.”
Fed. R. Civ. P. 19(a) advisory committee’s note to 1966 amendment. 1 Here, the Court concludes
that freeing Gritzuk from GCA’s non-compete provisions would only grant him hollow relief. In
fact, a subsequent suit against Erie would be necessary in order to adjudicate the similar
employment restrictions in Erie’s stock option agreement. Gritzuk seeks to work for Harvard
Maintenance free from any question of the legality of him doing so. Because GCA and Erie
have both challenged his employment at Harvard Maintenance, a victory over only one of them
will not clear the cloud hanging over him. Thus, the Court concludes that Erie is a party to be
joined if feasible. As briefly discussed above, however, Erie cannot be joined because it is not
subject to personal jurisdiction in this district. “Once the court determines that an absentee is
necessary, or, in current Rule terms, is a ‘required party[,]’ . . . but that joinder of the absentee is
not feasible . . . the court has only two options: it may proceed with the pending litigation or it
may dismiss the case.” 2 4 James Wm. Moore et al., Moore’s Federal Practice § 19.05 (3d ed.
2015). “Where joinder is not feasible, the question whether the action should proceed turns on
the factors outlined in subdivision (b). The considerations set forth in subdivision (b) are
nonexclusive.” Republic of Philippines, 553 U.S. at 861. Rule 19(b) provides:
If a person who is required to be joined if feasible cannot be joined, the court
must determine whether, in equity and good conscience, the action should
proceed among the existing parties or should be dismissed. The 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;
1.
Although Rule 19 has been amended twice since the 1966 amendments, the substance of the rule has not
changed. See Republic of Philippines, 553 U.S. at 855-56.
2. Despite the two options described above, GCA contends that the Court may nonetheless transfer the case even
if it finds that Erie is a required or necessary party. The Court disagrees. The text of Rule 19 provides only two
options. The Court cannot add language to the rule.
(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.
Fed. R. Civ. P. 19(b). After consideration of these factors, the Court concludes that dismissal is
appropriate here in light of “the public interest in avoiding piecemeal and inefficient litigation.”
Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v. Rite Aid of S.C., Inc., 210 F.3d 246, 253 (4th Cir.
2000) (quoting Acton Co. v. Bachman Foods, Inc., 668 F.2d 76, 81 (1st Cir. 1982)). Moore’s
Federal Practice advises that “the major focus [of Rule 19] is equity and good conscience, which
permits the court to consider all circumstances bearing on the fairness or advisability of choosing
one course over the other.” Moore et al., supra, § 19.05.
In the Court’s view, the parallel employment restrictions contained in the employment
agreement and the stock option agreement ought to be adjudicated in a single proceeding. Both
the public and the judiciary share an interest in efficient proceedings, and the Court concludes
that Erie’s absence from this action would necessitate unnecessary duplication of effort were it to
continue. Without a complete adjudication of the employment restrictions contained in both the
employment agreement and the stock option agreement, Gritzuk could be left without a complete
answer as to whether his employment at Harvard Maintenance is permissible. Even if this Court
could accord some relief, dismissal would be the superior disposition if there is an alternative
forum in which all interested persons can be joined in a single case.
On August 23, 2016, Judge Sheryl H. Lipman of the United States District Court for the
Western District of Tennessee held that Gritzuk was subject to personal jurisdiction in
Tennessee. While GCA and Erie have maintained their desire to litigate in Tennessee, Gritzuk
has consistently expressed his desire to litigate in South Carolina. In support of that argument,
he contended that he was not subject to personal jurisdiction in Tennessee. Judge Lipman’s
well-reasoned decision undercuts Gritzuk’s argument. The Tennessee case involves exactly the
same issues as the Court faces in this action. While Tennessee may not have been Gritzuk’s
preferred forum, the inability of this Court to exercise personal jurisdiction over Erie precludes
the Court from providing Gritzuk adequate relief as contemplated by Rule 19. Therefore, due to
Erie’s status as a necessary party, this Court’s inability to afford Gritzuk complete relief, and the
ability of the United States District Court for the Eastern District of Tennessee 3 to adjudicate all
of these claims simultaneously, the Court dismisses this action.
CONCLUSION
For the foregoing reasons, it is ORDERED that GCA’s motion to transfer is DENIED
and this action is DISMISSED.
AND IT IS SO ORDERED.
August 30, 2016
Charleston, South Carolina
3. Judge Lipman also found that venue was improper in the Western District of Tennessee and transferred the case
to the United States District Court for the Eastern District of Tennessee.
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