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Recovercare, LLC v. Fairweather

September 1, 2009

RECOVERCARE, LLC, AND CAMBRIDGE TECHNOLOGIES, INC, PLAINTIFFS,
v.
JOHN FAIRWEATHER, DEFENDANT.



The opinion of the court was delivered by: Joyner, J.

MEMORANDUM AND ORDER

This case is now before the Court for resolution of Defendant's Motion to Dismiss Plaintiffs' Complaint or, alternatively, for Summary Judgment. For the reasons that follow, the motion is DENIED.

Factual Background*fn1

This dispute arises out of an alleged contractual relationship between Defendant John Fairweather and Plaintiffs RecoverCare and Cambridge Technologies ("Camtech"). Camtech is a wholly owned subsidiary of RecoverCare. The parties do not dispute that RecoverCare is a citizen of Pennsylvania, Camtech is a citizen of Maryland, and Defendant is a citizen of New Jersey.

Defendant worked for Plaintiffs from February 2004 until October 14, 2008, managing Plaintiffs' production, manufacturing, and sales. Plaintiffs assert that over the course of his employment, Defendant held the titles of Senior Vice President of Operations for RecoverCare, Vice President of Operations for the Eastern Region for RecoverCare, and Senior Vice President-General Manager for Camtech. Included as a duty in these positions was "the responsibility to ensure that all employees executed an Invention and Confidentiality Assignment Agreement . . . or an Employment Agreement that assigned inventions to the employer." (Compl. 3.)

In addition to an assignment of interest in all inventions, RecoverCare's Assignment Agreement contained provisions that prevented the use of any confidential information for five years after the conclusion of the employment relationship and that prevented the solicitation of customers for a period of twelve months following the termination of employment. The Employment Agreement used by Camtech required the return of all confidential information and prohibited competition with the company for a period of three years. Plaintiffs assert that all employees were required to sign one or both of these agreements in order to continue working for Camtech or RecoverCare. Plaintiffs allege that Defendant informed RecoverCare that he had signed the Assignment Agreement and that Defendant informed Camtech that the Employment Agreement was unnecessary because he had already signed RecoverCare's Assignment Agreement. Plaintiffs relied on this representation and argue that Defendant is estopped from contesting the existence of these agreements.

After Defendant's resignation on October 14, 2008, Plaintiffs discovered that he had not executed an Assignment Agreement with RecoverCare, and on March 30, 2009, Defendant claimed that he had not been required, nor had he ever been asked, to sign any confidentiality or assignment agreement. Defendant also informed Plaintiffs that he would be pursuing a claim for royalties on many of Camtech's products that were developed during Defendant's employment.

Further, Plaintiffs charge Defendant with breaching the non-compete and non-solicitation provisions in the Assignment Agreement. Plaintiffs allege that Defendant has already attempted to hire away a RecoverCare employee to form a competing venture, and that Defendant has informed Plaintiffs that he will continue to solicit Plaintiffs' employees and customers.

Finally, Plaintiffs allege that Defendant continues to possess some of Plaintiffs' property, including "(1) a laptop computer, (2) mobile phone, (3) EZ Pass transponder, (4) American Express card, and (5) proprietary and confidential information, documents, brochures, files and sample equipment." (Compl. 8.) Plaintiffs state that they requested that Defendant return said items, and that he refused.

In Count I, Plaintiffs request a declaratory judgment under the Pennsylvania Declaratory Judgment Act to clarify that Defendant is bound by the Assignment Agreement and Employment Agreement and that he is not entitled to any royalties for products developed during Defendant's employment. Count II of Plaintiffs' Complaint seeks that Defendant be permanently enjoined from soliciting customers or employees in violation of the Employment and Assignment Agreements and that Defendant be directed to return all of Plaintiffs' property in his possession, and seeks damages for Defendant's breach of contract. The third and final count of the Complaint levies a charge of Conversion against Defendant and seeks the return of all of Plaintiffs' property as well as damages for the conversion.

In his Motion to Dismiss, Defendant asserts that this court lacks subject matter jurisdiction due to an insufficient amount in controversy. Defendant also argues that even if this Court does have jurisdiction over the matter, that the case should be dismissed because Plaintiffs fail to allege the existence of any valid contract, and, therefore, they have not stated a claim on which relief can be granted. Alternatively, Defendant moves for Summary Judgment and introduces documents to show that Defendant was never an employee of either Plaintiff and, therefore, there is no genuine issue of material fact that needs to be resolved as all of Plaintiffs' claims rest on Defendant's status as an employee.

Standard

A. 12(b)(1) Motion to Dismiss

Fed. R. Civ. P. 12(b)(1) allows a court to dismiss a case for lack of subject matter jurisdiction. 28 U.S.C. § 1332(a)(1) grants the federal district courts original jurisdiction in civil actions between citizens of different states in which the amount in controversy exceeds $75,000. The burden of establishing the existence of subject matter jurisdiction falls on the party asserting jurisdiction. Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir. 1990). For purposes of the amount in controversy, claims of one plaintiff against one defendant can be aggregated to reach the minimum amount in controversy requirement. Suber v. Chrysler Corp., 104 F.3d 578, 588 (3d Cir. 1997). In addition, when multiple plaintiffs have a "common and ...


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