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Gray Holdco, Inc. v. Cassady

June 30, 2010

GRAY HOLDCO, INC. PLAINTIFF,
v.
RANDY CASSADY, ET AL., DEFENDANTS



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

MEMORANDUM OPINION

Presently before the Court are Defendants, RWLS, LLC's ("RWLS") and Randy Cassady's ("Cassady")motions for judgment on the pleadings as to Plaintiff, Gray Holdco, Inc.'s ("Gray") claim that Cassady's alleged violation of a contract with Gray gives rise to causes of action for breach of contract (count one), intentional interference with existing contractual relationships (count two), unjust enrichment (count three), and civil conspiracy (count four). For the reasons stated below, Cassady's and RWLS's motion for judgment on the pleadings (Docket Nos. 49, 54) will be denied.

I. Facts

Gray Wireline Services, Inc., ("GWSI"), is a wholly-owned subsidiary of Gray Parent, Inc., which, in turn, is a wholly-owned subsidiary of Gray. GWSI provides wireline services to the oil and gas industry with operations in several states, including Texas and Pennsylvania.

In June 2006, GWSI hired Cassady as the District Manager in its Granbury, Texas location. In this position, Cassady oversaw the daily operations of the Texas facility and interacted with wireline equipment suppliers and manufacturers. He also had access to confidential information concerning GWSI's financial performance and business strategies.

After Cassady had been employed by GWSI for approximately six months, he and Gray entered into a New Hire Plan Option to Purchase Stock ("Option Agreement"). Cassady was granted a number of options to purchase shares of Gray in return for agreement to certain terms and conditions. Relevant to this matter, Cassady "agree[d] to be bound by the non-competition, non-solicitation, standstill, non-disparagement and/or confidentiality provisions as set forth in Schedule I hereto." Pl.'s Comp. ¶ 12. The non-competition and restrictive covenants included in Schedule I provided that, inter alia, Cassady would not utilize company proprietary information other than for advancing GWSI's business purposes, would not compete with GWSI after his termination for a period of two years and within a broad geographic region, and would not solicit GWSI employees to terminate their employment with GWSI.

In 2008, Cassady was transferred to Louisiana to take charge of GWSI's offshore operations. During this year, Cassady also spent a number of months overseeing a project in GWSI's Pennsylvania District, and, eventually in March 2009, became the permanent District Manager of GWSI's Pennsylvania operations. In July 2009, Cassady was promoted to Region Manager. With his new position, Cassady received access to additional GWSI confidential information and worked directly with GWSI's most significant customers.

On September 21, 2009, Cassady resigned from GWSI. Shortly thereafter, Cassady and Matt Gray, another former GWSI employee, established RWLS, a cased hole wireline company that competes directly with GWSI in Pennsylvania. Cassady solicited GWSI employees to join RWLS.

II. Procedural History

On November 13, 2009, Gray filed the present action against Cassady and RWLS requesting money damages and injunctive relief. According to count one of the complaint, Cassady breached the terms of the Option Agreement by soliciting current and prospective clients and employees of GWSI, by misappropriating and using confidential and proprietary information belonging to GWSI, and, by engaging in a business in direct competition with GWSI both during his employment and after his termination. Count two of the complaint alleges that Cassady's breach of his contractual obligations to Gray was made at the direction of and with the knowledge of RWLS and, accordingly, RWLS's activity in this regard constituted a tortious interference with contractual relations.

Count three avers that Cassady's breach of the Option Agreement unjustly enriched Cassady and that RWLS was unjustly enriched by knowingly profiting from Cassady's breach. Finally, count four outlines a civil conspiracy between Cassady and RWLS to unlawfully solicit GWSI's customers and employees, to engage in competition with GWSI in violation of Cassady's contractual obligations, and to misuse GWSI's confidential and proprietary information. Under each count of the complaint, Gray averred that it has suffered monetary damages and requested compensatory and punitive damages and injunctive relief.

On the same date it filed its complaint, Gray filed a motion for a preliminary injunction seeking to enjoin Cassady and RWLS from conducting business that it contended was in violation of the restrictive covenants contained in the Option Agreement. The parties engaged in expedited discovery and, on January 12-13, 2010, this Court conducted an evidentiary hearing on the preliminary injunction motion. The Court concluded that Gray did not meet its burden entitling it to relief under Fed. R. Civ. P. 65 and denied the motion for a preliminary injunction (Docket No. 37). Both Cassady and RWLS have now filed Fed. R. Civ P.12 (c) Motions for Judgment on the Pleadings, or, in the Alternative, Motions to Dismiss under Fed. R. Civ. P. 12(b)(6). (Docket Nos. 49, 52 respectively).

III. Standard of Review

Under Fed. R. Civ.P. 12(c), judgment on the pleadings will not be granted unless the movant clearly establishes there are no material issues of fact, and he is entitled to judgment as a matter of law. Rosenau v. Unifund Corporation, 539 F.3d 218, 221 (3d Cir. 2008). A court confronted with a Rule 12(c) motion applies the same standards as apply to a failure to state a claim defense under Rule 12(b)(6) and accepts the truth of all factual allegations in the complaint and draws all reasonable inferences in favor of the non-movant. Revell v. Port Authority of New York and New Jersey, 598 F.3d 128, 134 (3d Cir. 2010). In order to survive a 12(b)(6), and a similar 12(c) motion, the complaint "must ...


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