Steves and Sons, Inc. v. Jeld-Wen, Inc., No. 3:2016cv00545 - Document 734 (E.D. Va. 2017)
Court Description: MEMORANDUM OPINION to 579 Order re: 457 Motion to Voluntarily Dismiss Counterclaims Without Prejudice. See for complete details. It is so ORDERED. Signed by District Judge Robert E. Payne on 12/18/2017. (nbrow)
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Steves and Sons, Inc. v. Jeld-Wen, Inc. Doc. 734 IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Richmond Division f CLERK. u.S.oiSiR1cTCO'URr RICHMOND, VA STEVES AND SONS, INC., Plaintiff, v. Civil Action No. 3:16cv545 JELD-WEN, INC. , Defendant. MEMORANDUM OPINION This PLAINTIFF matter is before INC.' S JELD-WEN, the MOTION COUNTERCLAIMS WITHOUT PREJUDICE Court on TO (ECF No. DEFENDANT/COUNTER- VOLUNTARILY 457) . DISMISS For the reasons set forth below, the motion was denied. BACKGROUND This action was filed on June 29, 2016 after the failure of a contractually mandated mediation process. 5) (Under several ONE, 15 Seal). claims Steves against and Sons, JELD-WEN, Inc. Inc. U.S.C. § 18. arising In COUNT out of TWO, ("JELD-WEN"). a Steves 2012 COUNT THREE, Steves express and implied. alleged alleged long-term agreement between Steves and JELD-WEN a (ECF No. ("Steves") Steves alleged a violation of the Clayton Act, contract In Complaint a alleged In COUNT Section 7, breach doorskin of supply ("the Supply Agreement") . breach of warranty, both In COUNT FOUR, Steves sought a declaratory Dockets.Justia.com judgment as to certain rights under the Supply Agreement and the putative termination of that contract. Id. JELD-WEN filed a motion denied and, on August 5, Complaint. ECF Nos. to 2016, dismiss COUNT ONE, which was JELD-WEN filed its Answer to the (Under 30 175-92. 64. Seal) , At a pretrial conference on October 19, 2016, the matter was set for trial to begin on June 12, 2017, and a detailed schedule for the conduct of pretrial proceedings was thereafter implemented. Pursuant to that schedule, the parties engaged ECF No .. 65. in extensive discovery. On Answer March and asserted 27, to "to 2017, add JELD-WEN sought counterclaims address JELD-WEN's leave against recent to Steves, amend which discovery of its were Steves' theft of JELD-WEN trade secrets and confidential information," the alleged theft of which had been documents produced during litigation. counterclaims were predicated upon discovered by virtue ECF No. the 101 at assertion that 1-2. of The Steves- through its principal officers, Edward Steves and Sam Steves II ("the Steves employees, Brothers")-along John had engaged in a Pierce ("Pierce") with and two former John Ambruz JELD-WEN ("Ambruz"), conspiracy and had stolen trade secrets from JELD-WEN respecting how to build and operate a doorskin plant that could produce products of the type that Steves was buying from JELD-WEN under the Supply Agreement. 2 JELD-WEN under asserted federal Violation SECOND of and the the Texas Trade Secrets Act, FOR 18 U.S.C. Texas Practice with Law; Secrets the § Act, Under Texas & Remedies Tortious SIXTH Texas to 1832 (a) (5); Common counterclaims 1836; Defend THIRD COUNTERCLAIM Annotated§§ Law; RELIEF, Violate Uniform Trade Code FOR 18 U.S.C. § Conspiracy FOURTH COUNTERCLAIM FOR RELIEF, Contract RELIEF, COUNTERCLAIM RELIEF, Violation of 134A. 008; FIRST Trade FOR RELIEF, Civil proposed law: Defend COUNTERCLAIM following Secret Act, 134A.001 Tortious Interference FIFTH COUNTERCLAIM FOR Interference with Contract Under Texas Common COUNTERCLAIM FOR RELIEF, Breach of the Implied Covenant of Good Faith and Fair Dealing Under Delaware Law; and SEVENTH COUNTERCLAIM FOR RELIEF, Counterclaims (ECF No. 106) Steves vigorously Breach of Contract. Proposed (Under Seal) '1I'1I 41-78. opposed addition the of the counterclaims, arguing that the putative counterclaims should be brought in San Antonio, Texas where Steves, Pierce, and Ambruz could be sued. PLAINTIFF'S MEMORANDUM IN OPPOSITION TO DEFENDANT JELD-WEN, at 14. INC.'S MOTION FOR LEAVE TO AMEND ANSWER (ECF No. 117) At oral counterclaims, argument on the motion for leave to add the Steves continued to argue that the counterclaims should be pursued in Texas, not in this case. JELD-WEN continued to advocate zealously for prosecution of the this action. 3 counterclaims in On May 17, 2017, the Court allowed JELD-WEN to proceed with the counterclaims in this forum. 1 Court trade secrets counterclaims antitrust claims. ECF ordered separately that from the the At the same time, however, the Nos. be tried 239-240. The parties subsequently continued with discovery and were asked to comment about the sequencing of Steves' anti trust and contract claims and JELD-WEN's counterclaims. Trial for the counterclaims was set to begin on February 12, 2018. ECF Nos. 259-261. Then, after briefing and argument on the topic, on September 13, 2017, Steves' motion to dismiss the Second, Sixth, and Seventh Counterclaims was granted. Those counterclaims were dismissed with prejudice. ECF Nos. 353-354. Shortly thereafter, counsel for Steves and counsel for JELD-WEN asked the Court to move the trial in the trade secrets case to lawyers antitrust April would 2018 be claims based on involved in January representations extensively 2018, and in the could that the trial not of same the adequately prepare for trial of the trade secrets counterclaims beginning on February 12, 2018. ECF No. 352. Because of these entreaties, and only because of these entreaties, the Court moved the trial of JELD-WEN's counterclaims to April 9, 2018. ECF No. 374. Shortly thereafter, JELD-WEN filed its Amended Answer and Counterclaims, which contained identical counterclaims to those asserted in the proposed counterclaims. See Counterclaims (ECF No. 252) (Under Seal) <JI<[ 41-78. 1 4 On September 26, state court wherein 2017, it JELD-WEN asserted filed its an action in Texas trade secret claims and certain related claims against the Steves Brothers and Pierce. That complaint contained the following claims under Texas law: COUNT ONE, CPRC § Violation 134A, Violate against Texas of the all Texas Uniform Trade defendants; Uniform Trade Secrets COUNT Act, Secrets Act, TWO, CPRC Conspiracy to 134A, § against all defendants; COUNT THREE, Breach of Contract, against Pierce; COUNT FOUR, Steves Tortious Brothers; Interference COUNT FIVE, with Tortious Contract, against Interference, the against Pierce; COUNT SIX, Breach of Fiduciary Duty, against Pierce; and COUNT SEVEN, against 1) CJICJI the Aiding Steves and Abetting Brothers. Breach Texas of Fiduciary Petition (ECF Duty, No. 403- 53-70. Then, dismiss on October its 23, counterclaims 2017, in JELD-WEN voluntarily moved to this case. ECF briefing on that motion had been completed, No. 457. JELD-WEN After filed an amended complaint in the Texas case that removed several claims from the original complaint: namely, Count One, Count Two, Count Four. Amended Texas Petition (ECF No. 607-1) CJICJI and 53-58. DISCUSSION JELD-WEN' s 41 (a) (2), motion is brought pursuant to which allows a plaintiff, Fed. Civ. P. with approval of the Court, voluntarily to dismiss an action without prejudice. 5 R. "The focus of district courts when considering a motion to dismiss without prejudice is 'primarily on protecting the interests of the defendant.'" Teck Gen. P'ship v. Crown Cent. Petroleum Corp., 28 F. Supp. Corp., 2d 989, 991 (E.D. 819 F.2d 1270, 1272 Va. 1998) (4th Cir. (quoting Davis v. USX 1987)). The factors to be considered in making the necessary assessment are: "(l) the opposing party's effort and expense in preparing for trial; (2) (3) insufficient explanation for dismissal; and ( 4) Id. excessive delay or lack of diligence on behalf of the movant; the present state of litigation, i.e., whether a motion for summary judgment is pending." (quoting Gross v. (4th Cir. 1998)); Spies, of 133 F.3d 914, see also Howard v. the need 1998 WL 8006, at *5 Inova Health Care Servs., 302 F. App'x 166, 178-79 (4th Cir. 2008). It is no understatement to say that the this circuit prejudice to voluntary ambiguity." "on a the issue non-movant dismissal Howard, under 302 F. to of what support Rule App' x constitutes denial 4l(a) (2) at jurisprudence in 179. is of a not sufficient motion free Nonetheless, for from it is settled that "'prejudice to the defendant does not result from the prospect of a second lawsuit'" or "'the possibility that the plaintiff will gain a tactical advantage over the defendant in 6 future litigation."' Id. (quoting Davis, 819 F. 2d at 127 4-7 5) . On the other hand, while the mere filing of a motion for summary judgment does not meet the prejudice standard, the Fourth Circuit has found "on multiple occasions that a district court does not abuse its discretion in denying a motion for voluntary dismissal if the case has advanced to the summary judgment stage and the parties have incurred substantial costs in discovery." Id. (citing Miller v. (4th Cir. 2004); Francis v. Cir. 2001); Skinner v. WL 507624, Elec. at Corp., *2-3 848 Terramite Corp., Ingles, 114 1 F. F. App'x 152, First Am. Bank of Va., (4th Cir. F.2d 186, 1995); 1988 App'x 54059, 540 154 (4th 64 F.3d 659, 1995 Sullivan v. WL 536, at Westinghouse *2 (4th Cir. 1988)). Applying the general factors here leads to the conclusion that JELD-WEN's motion should be denied. 1. The Opposing Trial Party' s Effort and Expense Steves has demonstrated that it has in Preparing for incurred considerable expense and effort in preparing for trial-which, until recently, was anticipated to begin on February 12, 2018. Several rounds of document production analysis of taken, paper filed, and have documents discovery fact is been completed, complete, responses discovery has 7 all and and, likewise, depositions supplements closed. JELD-WEN the have been have been has also specified the trade secrets that are to be asserted at trial. ECF No. 4 65. November 3, December 8, The expert disclosures of JELD-WEN were filed on 2017; Steves' 201 7; and expert rebuttal disclosures expert were disclosures filed are due on on December 22, 2017. Expert discovery will conclude on January 12, 2018. 24, Motions for 2018. schedule ECF summary judgment are to be filed on January Nos. established 374, 583. for Moreover, every pretrial there event is a detailed necessary to prepare the case for trial on April 9, 2018. 2 ECF No. 374. Although it is true that JELD-WEN has agreed that whatever discovery has been taken in this action can be used in the Texas case, Indeed, that proposition seems to one of limited utility. JELD-WEN's counsel in the Texas case has already sought to again depose the Steves Brothers than once in this action), the be (who have been deposed more thereby creating serious doubt that commitment to using discovery from this case will prevent discovery from being expanded in the Texas action. If JELD-WEN's conduct so far in that case is any indication, its promise here is a hollow one. Interestingly, JELD-WEN filed its suit in Texas only 12 days after asking the Court to enter this revised schedule setting the trade secrets trial for April 2018, instead of February 2018. 2 8 2. Excessive Delay or Lack of Diligence by the Movant Delay Instead, and they schedules, diligence must be cannot viewed be in measured the context in a vacuum. of the trial the schedules followed in readying a case for trial, and the knowledge of the parties. It became clear in the spring of 2017 that the Court was going to sever JELD-WEN's trade secrets counterclaims and would not try them with Steves' antitrust claims. In May 2017, the Court entered an order separating the anti trust trial and the trade secrets trial. Nonetheless, JELD-WEN sat by idly and did nothing to initiate the Texas case until September 2017, after it had suffered a number of adverse rulings and after almost all the discovery for completed. And, September 25, this Court trade secrets 2017, the its trial had been it was well aware that the trial date in its was trade secrets February 12, 2018. and without disclosing to the Court dismiss counterclaims shortly before JELD-WEN filed the Texas case on for counterclaims the counterclaims, date on the and related With all its Texas this law knowledge, intention to move to JELD-WEN asked the Court to change premise that the lawyers working the antitrust case and trade secrets case were the same, and that it would be too much of a task to expect them to go to trial on the scheduled February 12, 2018 date. 9 In sum, JELD-WEN waited practically the whole summer before filing its Rule 41 motion here. Thus, several months. That delay is the delay has been one of inexcusable given the argument that Steves made at the outset of the proceedings involving the counterclaims: that all of the brought against Steves, court, a counterclaims its officers, proposition that was should have been and Pierce in Texas state roundly rejected by JELD-WEN at the time. 3. Explanation of the Need for Dismissal JELD-WEN's disingenuous rejected explanation given its Steves' separately the need earlier arguments invitation in Texas. of For to have instance, the for dismissal is in the case, when it counterclaims brought JELD-WEN contends that the Texas state law claims are somehow unique. But they are not. The Court is capable of deciding JELD-WEN's state law counterclaims, as well as any claims from the Texas case that may be added- breach contract, tortious of fiduciary duty-here. is straightforward, interference, and breach of The law respecting those causes of action and does not require any particular expertise in Texas law to adjudicate. Moreover, the claims in the Texas case are similar to the pending counterclaims here so any concern about introducing new issues at this stage of the litigation is minimal. Although the breach of contract and tortious 10 interference claims against Pierce and the breach of fiduciary duty claims against all defendants in the Texas case have no counterparts in JELD-WEN's counterclaims here, there is likely substantial overlap between the evidence relevant to those Texas claims and the documents already produced during discovery on the counterclaims in this case. The parties should therefore need little, if any, additional discovery for the new claims. The other principal reason offered by JELD-WEN dismissing the counterclaims and trying them in Texas is for that JELD-WEN cannot secure jurisdiction over the Steves Brothers or Pierce in this forum. Of course, that is the very point that Steves made when it opposed the filing of the counterclaims and urged JELD-WEN to proceed in Texas. Nonetheless, both the Steves Brothers defendants and Pierce in this have action. agreed to Consequently, be added as counter- the need to move the case to Texas is insubstantial. 3 In addition to these problems with JELD-WEN's arguments, it is well-settled that a party cannot seek a voluntary dismissal with the hope of avoiding rulings that have been adverse to it in a pending case. Teck Gen. P'ship, 28 F. Supp. 2d at 992; see As JELD-WEN pointed out at oral argument, the proper method for joining a party into a case is to file a motion under Fed. R. Civ. P. 24, which the Steves Brothers and Pierce have done. ECF Nos. 591, 606. Accordingly, the principal-indeed the only legitimate-reason for JELD-WEN's request for voluntary dismissal has disappeared. 3 11 also Francis, 1 F. App'x at 154. That constitutes prejudice to the party who prevailed on those motions. JELD-WEN argues that it rulings made by the is Court. so. not seeking to revisit But, any of the it has already started the process of trying to do For example, the parties recently completed here a Court- approved fact discovery period in which all depositions were to be taken and full examination was to be had. in Texas has JELD-WEN's counsel restarted that process by seeking once again to depose the Steves Brothers. That, by any measure, represents an effort to avoid the consequences of the pretrial rulings made by the Court about the discovery schedule in the case. that conduct, the Court can take no comfort In light of in JELD-WEN's assurance that it will not seek to revisit other issues as to which it has received unfavorable rulings. 4. Present Stage of Litigation The present stage of litigation has been outlined above. Fact discovery is complete; expert discovery is underway with an impending completion judgment proceedings; date; there is a schedule for summary and all of the necessary pretrial events and the Final Pretrial Conference have been scheduled. A trial date was set, and then moved to accommodate counsels' request for adequate trial preparation time. The trade secrets case will go to trial in early April 2018. It is undisputed that the counterclaims would likely not go to trial in Texas until the 12 fall of 2018 at the earliest, and very likely not That delay will be prejudicial to Steves, even then. which needs to have this litigation resolved as promptly as possible so that it can staunch the flow of legal fees and get about its business with all the issues presented here resolved. One would think that the delay would likewise be prejudicial to JELD-WEN for similar reasons. CONCLUSION For JELD-WEN, the foregoing INC.'S MOTION reasons, TO DEFENDANT/COUNTER-PLAINTIFF VOLUNTARILY DISMISS COUNTERCLAIMS WITHOUT PREJUDICE (ECF No. 457) was denied. It is so ORDERED. /s/ Robert E. Payne Senior United States District Judge Richmond, Virginia Date: 2017 13
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