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James E. Boone and Volt Information Sciences, Inc v. Corestaff Support Services

June 9, 2011


The opinion of the court was delivered by: Richard W. Story United States District Judge

ORDER This case comes before the Court on Plaintiffs' Motion for Summary Judgment [5], Defendants' Motion to Dismiss [7], Defendants' Motion to Disqualify[8], and Plaintiffs' Motion to Stay Discovery [26]. After considering the record, the Court enters the following Order.


Plaintiffs filed this action on April 22, 2011 seeking a declaration that restrictive covenants contained in a non-compete agreement ("Non-Compete") [1-2] entered into between James E. Boone and Corestaff Support Services, Inc.*fn1 ("Corestaff") in association with an employment agreement ("Employment Agreement") [1-1] are unenforceable as a matter of law and seeking injunctive relief preventing Defendants from enforcing the covenants, instituting an action against Plaintiffs for violation of the covenants, or precluding Boone's employment with Volt Information Sciences, Inc.*fn2 ("Volt"). (Dkt. [1] at 27). Both the Non-Compete and Employment Agreement were signed by Boone and Defendants at the offices of Corestaff and Impellam in Atlanta, Georgia. (Dkt. [18] at 1).

Boone began employment with Corestaff, as its President and CEO, in December 2008 by entering into the Employment Agreement. (Complaint, Dkt. [1] at ¶¶ 16, 17, 30). In association with the Employment Agreement, Boone signed the Non-Compete which, among other things, restricts his engagement or participation in the business of staffing services and temporary employment services or any other business in which Corestaff and its affiliates engage in, upon leaving Corestaff. (Id. at ¶¶ 18-29). As President and CEO of Corestaff, Boone lived and worked in Georgia. (Id. at ¶ 33).

On April 11, 2011, Boone hand-delivered to Cheryl Jones, Impellam Group PLC's*fn3 ("Impellam") Chairman, and Boone's boss, sixty days written notice of his intent to resign his employment with Corestaff. (Id. at ¶ 34). Jones informed Boone that Defendants "will definitely enforce the [NCA]." (Id. at ¶ 37). Boone intends to commence employment with Volt, a direct competitor of Corestaff, on June 13, 2011. (Id. at ¶¶ 12, 39). Boone's positions with Volt--including group CEO of ProcureStaff Technologies Ltd., a subsidiary of Volt, and CEO of Volt Consulting Group, a unit of another Volt Subsidiary--will be based in Georgia. (Id. at ¶ 41). In the course of his employment with Volt, Boone will solicit, or attempt to solicit, current or former Corestaff customers to purchase competing products and services from Volt and solicit the employment of former employees or agents of Corestaff or Impellam and its subsidiaries. (Id. at ¶ 45, 46). If the restrictive covenants in the Non-Compete are enforceable, Boone's activities on behalf of Volt will violate one or more of these covenants. (Id. at ¶ 47). Plaintiffs therefore believe that Volt will take legal action to prevent Boone from working for it and have thus filed the present action. (Id. at ¶ 49).

On May 6, 2011, Corestaff and Impellam, defendants in this action, along with Corporate Employment Resources, Inc.*fn4 ("CER"), Guidant Group, Inc.*fn5 ("Guidant"), Corporate Services Groups Holdings, Inc.*fn6 ("CSGH"), and The Corporate Services Group, Ltd.*fn7 ("CSG") (collectively the "Delaware Plaintiffs"), filed suit against Plaintiffs in a Delaware court ("Delaware Action"). (Complaint in Delaware Action, Dkt. [7-4]). CER, Guidant, and Corestaff are all subsidiaries of CSGH (collectively the "U.S. Companies"). (Id. at ¶¶ 5, 12). CSGH is a wholly owned subsidiary of CSG, which is a wholly owned subsidiary of Impellam. (Id. at ¶¶ 5, 7). After entering into the Employment Agreement and Non-Compete, Boone was elected by the written consent of CSG to be a director of CSGH and was elected by written consent of CSGH to be a director on the boards of Corestaff, CER, and Guidant. (Id. at ¶ 18). Boone was also elected by the Boards of Directors of CSGH, Corestaff, and CER to serve as President of these companies and elected by the Board of Directors of Guidant to serve as its Vice President. (Id.). In practice, he was the head of Impellam's United States operations. (Id.). The Delaware Plaintiffs filed suit to prevent Boone "from violating his fiduciary duties and contractual obligations owed to [Delaware] Plaintiffs by taking their confidential information and trade secrets and using them in the employ of a direct competitor, Volt." (Id. at ¶ 1). The Delaware Action was subsequently removed to the U.S. District Court for the District of Delaware.

Defendants seek to have this action stayed or dismissed in favor of the Delaware Action. Neither the Employment Agreement nor the Non-Compete has a forum selection clause prescribing that suit be brought in Delaware. Both the Employment Agreement and the NCA have choice-of-law provisions stating that Delaware law is to govern both agreements. (Dkt. [1-1] at ¶ 15(a); (Dkt. [1-2] at ¶ 4(d)).


The Declaratory Judgment Act (the "Act"), 28 U.S.C. § 2201, et seq., states that "any Court of 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." 28 U.S.C. § 2201. The Supreme Court has noted that the Act has been understood to confer on federal courts unique and substantial discretion in deciding whether to declare the rights of litigants . . . . The statute's textual commitment to discretion and breadth of leeway we have always understood it to suggest, distinguish the declaratory judgment context from other areas of the law in which concepts of discretion surface.

Wilton v. Seven Falls Co., 515 U.S. 277, 286-287 (1995) (citations omitted). "The factors relevant in deciding whether to hear a declaratory judgment action are equitable in nature." Manuel v. Convergys Corp., 430 F.3d 1132, 1135 (11th Cir. 2005)(citation omitted). Some relevant factors include: (1) the convenience of the witnesses; (2) location of documents and access to sources of evidence; (3) convenience of the parties; (4) the locus of operative facts; (5) a forum's familiarity with the governing law; (6) the weight accorded a plaintiff's choice of forum; and (7) trial efficiency and the interests of justice, based on the totality of the circumstances. Id. at 1135 n.1.

After considering these factors, in light of the totality of the circumstances, the Court will not exercise its jurisdiction over Plaintiffs' request for declaratory judgment. In reaching this conclusion, the Court finds that compelling circumstances exist to not rigidly apply the first-filed rule in this instance.*fn8 Defendants' Motion to Dismiss [7] is GRANTED; Plaintiffs' Complaint for Declaratory Judgment and Injunctive Relief [1] is DISMISSED. Plaintiffs' Motion for Summary Judgment [5], Defendants' Motion to Disqualify [8], and Plaintiffs' Motion to Stay Discovery [26] are DENIED as moot.

A. This action was filed in anticipation of litigation.

The Eleventh Circuit has noted that one equitable consideration in determining whether to exercise jurisdiction over a declaratory judgment action is whether such action was filed in anticipation of another pending proceeding. Ven-Fuel, Inc. v. Dept. of Treasury, 673 F.2d 1194, 1195 (11th Cir. 1982). Defendants argue that Plaintiffs filed this action in anticipation of the Delaware Action. Plaintiffs state in their Complaint that when Boone gave Jones his resignation, she stated that "Defendants 'will definitely enforce the Non-Compete.'" (Dkt. [1] at ¶ 37). Plaintiffs argue, however, that Jones's statement is insufficient to render this action in anticipation of litigation and does not provide a reason for this Court to not exercise jurisdiction over this action. The Court finds Plaintiffs argument unpersuasive.

Plaintiffs argue that in order "[t]o constitute an improper anticipatory filing, a lawsuit must be triggered by a direct threat of imminent litigation," and Jones's statement does not represent such a threat. Manuel v. Convergys Corp., No. 1:04-CV-1279, 2004 WL 5545025, *3 (N.D. Ga. Oct. 18, 2004). Plaintiffs reliance on the district court decision in Manuel is inapposite, because as the Eleventh Circuit noted, there was no threat of legal proceedings, but rather Manuel's former employer continued to seek assurances that his new job would not violate their non-competition agreement. Manuel v. Convergys Corp., 430 F.3d 1132, 1137 (11th Cir. 2005). The Court also finds Geltech Solutions, Inc. v. Marteal, Ltd., No. 09-CV-81027, 2010 WL 1791423 (S.D. Fla. May 5, 2010), distinguishable. The court in that case found that a cease and desist letter that threatened unspecified future legal action did not make the subject action anticipatory. Id. at *8. The court in that case held that the filing of the ...

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