United States District Court, M.D. Pennsylvania
Lewis J. GRILL and Carmela C. Grill, Plaintiffs
Gregg R. AVERSA and the Sage Corporation, Defendants.
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Eugene Mattioni, Michael Mattioni, Mattioni, Ltd., Philadelphia, PA, for Plaintiffs.
Carol Steinour Young, Dana W. Chilson, James P. DeAngelo, Kimberly A. Selemba, McNees, Wallace & Nurick, Harrisburg, PA, for Defendants.
MARTIN C. CARLSON, United States Magistrate Judge.
" Happy families are all alike; every unhappy family is unhappy in its own way." Leo Tolstoy, quoted in Orchard v. Covelli, 590 F.Supp. 1548, 1550 (W.D.Pa.1984) aff'd sub nom. Appeal of Orchard, 802 F.2d 448 (3d Cir.1986) and aff'd, 802 F.2d 448 (3d Cir.1986).
Three decades ago, Gerald J. Weber, a renowned federal judge in Pennsylvania who was confronted with a familial dispute which erupted in the context of a closely-held family corporation perceptively noted that Tolstoy's philosophical paradigm regarding the nature of unhappy families bore " an alarming similarity in the demise of such [corporate] entities where the survival of a business association is so perilously tied to the continuing vitality of intimate personal relationships. Many lawsuits arising from disputes among shareholders in closely-held corporations are characterized by the parties' inability to separate the business and personal aspects of their relationship." Id.
Today we are called upon to consider anew the wisdom of Judge Weber, and Tolstoy, as we examine another corporate dispute cast against the backdrop of an " unhappy family [that] is unhappy in its own way." The protagonists in this lawsuit,
Lewis Grill and Greg Aversa, are brothers-in-law. Grill's sister is Aversa's wife. However, these familial ties are not the only bounds that link Grill and Aversa to one another. Grill and Aversa are also shareholders in Sage Corporation, a closely held family corporation in which Aversa owns a majority interest and Grill is a minority shareholder.
These parties, and relatives, are now embroiled in a lawsuit in which each accuses the other of misappropriation of corporate assets and opportunities, and each contests claims of shareholder oppression. Such claims by parties who share familial ties, sadly, are not new to the law. Quite the contrary: " Frequently, closed corporations originate in the context of relationships personal in nature, often undertaken by family members or friends. It is ironic that these enterprises become a most frequent setting for the exploitation of minority shareholders when the personal relationship has gone sour" Orchard v. Covelli, 590 F.Supp. at 1557 (citations omitted).
Before the Court is Plaintiffs' motion for a preliminary injunction in the form of a Court order requiring Defendants to reinstate the employment of Lewis J. Grill pending the resolution of this lawsuit. Defendants oppose the motion, asserting that Grill's employment was properly terminated in August 2012, during the pendency of this litigation, after it was discovered that Grill was refusing to follow corporate policy and the specific directives of Sage's President; was improperly competing with his former employer by diverting corporate opportunities; and had improperly deposited funds payable to Sage into accounts of other business concerns that Lew Grill controls. The Court held two days of evidentiary hearings on the motion on October 16 and 25, 2012. Upon consideration of the motion, and the evidence that was developed during the hearings, we find that Plaintiffs have failed to sustain their motion for preliminary injunctive relief, and the motion will be denied.
II. PROCEDURAL BACKGROUND
The Sage Corporation is a private company, a closely-held, family-owned corporation that provides education and training to commercial truck drivers. Plaintiff's Lewis J. Grill and Carmela C. Grill, husband and wife, and minority shareholders of the Sage Corporation, commenced this action on January 23, 2012, seeking injunctive relief against Sage and its President and majority shareholder, Gregg R. Aversa. In the original complaint, Plaintiffs claimed that Aversa was mismanaging Sage, engaging in corporate malfeasance, and indulging in shareholder oppression. Plaintiffs accordingly sought equitable relief in the form of a court order requiring Defendants to produce, or permit Plaintiffs, their agents, and representatives, to gain access to corporate records in accordance with Pennsylvania law. (Doc. 1.)
On January 24, 2012, Plaintiffs moved for a preliminary injunction to permit, inter alia, the inspection of Sage's corporate books and records. (Doc. 3.) After being granted an extension of time to respond, Defendants filed a brief opposing the motion on February 17, 2012. (Doc. 14.) On May 30, 2012, the Court held an evidentiary hearing on the motion. Following testimony by Lew Grill and Joseph Barbagallo, a forensic accountant that the Grills retained to examine Sage's corporate, accounting, and financial records, the parties engaged in settlement discussions outside the Court's presence, and ultimately reached an agreement that resulted in the motion for a preliminary injunction being withdrawn.
From this initial dispute the litigation proceeded forward solely as a shareholder disclosure case until September 14, 2012,
when the Grills filed the motion for preliminary injunctive relief that is currently awaiting resolution. (Doc. 38.) In this motion, Lew Grill alleges that he was improperly terminated from his employment with Sage in August of 2012, during the pendency of this litigation. The Grills seeks a court order directing Defendants to reinstate Lew Grill to his employment with Sage pending the resolution of this lawsuit. Grill argues that this equitable relief is warranted under the circumstances of this case, arguing that he is likely to prevail on the merits of the lawsuit; that money damages cannot compensate him for the injuries caused by his termination; that the injunction would not be injurious to other interested parties; and that the requested relief is in the public's interest.
After filing their motion for a preliminary injunction, Plaintiffs also moved for leave to file an amended complaint to include new claims and additional legal and equitable theories of relief. That amended complaint was filed on September 20, 2012 (Doc. 43.), and includes claims for shareholder oppression under Pennsylvania statutory law (Count I); claims for injunctive relief that would permanently prohibit Defendants from terminating the Grills' employment and would require Defendants to cease conducting all business without consulting with and obtaining the consent of the Grills (Count II); claims for breach of fiduciary, loyalty and good-faith duties (Count III); claims that Aversa engaged in legal and equitable fraud by deliberately and materially misleading Plaintiffs as minority shareholders of Sage (Count IV); claims for conversion and unjust enrichment (Counts V and VI); a claim that the Court should impose a constructive trust over all of Sage's assets (Count VII); and a claim for wrongful and retaliatory termination of Lew Grill (Count VIII). In the amended complaint, Plaintiffs seek a range of equitable and legal relief, including compensatory and punitive damages, attorneys' fees, costs and expenses, front and back pay, the reinstatement of Lewis Grill to employment with Sage, " and that he continue to receive his salary as an employee of Sage." (Doc. 43, at 33.)
It is this last claim for wrongful and retaliatory discharge that forms the primary basis for Plaintiff's motion for preliminary injunctive relief. Defendants filed a brief in opposition to the motion on October 4, 2012, and the Court promptly scheduled an initial hearing on October 16, 2012. At the close of that first day of testimony, the parties advised the Court that they would require at least one additional day of evidentiary presentation and argument. Accordingly, the Court reconvened the hearing on October 25, 2012. At the conclusion of these two days of hearings, the Court took the matter under advisement.
III. FACTUAL BACKGROUND
The following represents a summary of the evidence presented during the two days of hearings held on the motion.
A. Lew Grill is an Established and Recognized Expert Witness.
Lewis J. Grill represents himself as a renowned figure in the truck driving and education industry, who has built a particular niche as an accident reconstruction expert witness in truck driving litigation throughout the United States. In this regard, the proceedings opened with brief testimony by David B. Dowling, Esq., a Harrisburg lawyer who testified that he has retained Lew Grill's services as an expert witness for the plaintiffs in a personal injury action captioned Anh Nguyen, et al. v. McCammon Trucking, Inc., which is currently pending in the Court of Common Pleas of Berks County. (Doc. 56,
Notes of Testimony, at 8) (hereafter " N.T. at ___." ).
Mr. Dowling testified that when he retained Grill's services, he believed he was retaining Grill alone, although he appears to have found Grill through a website maintained by Sage. ( Id. at 9.) Dowling testified that Grill struck him as someone who had experience as a truck driving educator, someone who had experience testifying in court, and who was articulate about truck driving standards of care. ( Id. ) Finding this mix of skills and experience made Grill " the ideal expert" , Dowling engaged his services in the Nguyen case. ( Id. )
When Dowling was presented with a series of questions about the potential consequences to his clients if Grill was unable to testify as an expert in the Nguyen case, Dowling offered that his chances of winning the action would be diminished and " impacted significantly" . ( Id. at 10.) Indeed, Dowling represented that given the posture of the pending litigation, he was uncertain about whether he could realistically obtain a new expert at this late date, and even if he could he " doubt[ed that he] would find someone like Mr. Grill." ( Id. ) Dowling also testified that if Sage offered to provide a substitute or replacement expert in Mr. Grill's absence, he would decline the offer as unacceptable. ( Id. at 11.)
In response to cross examination, Dowling acknowledged that he had only retained Grill in the Nguyen lawsuit and no other litigation. ( Id. at 12-13.) Dowling testified that Lew Grill told him immediately prior to the hearing that there was some doubt as to his ability to fulfill his role as an expert witness in the Nguyen case, owing to Defendants' termination of his employment. ( Id. at 15.) However, in response to further questioning, Dowling acknowledged that if Sage permitted Grill to testify in the Nguyen case, then Grill's employment status with the Sage Corporation would not harm Dowling's clients or their case. ( Id. at 16.)
The Grills next played for the Court a very brief video deposition of Bruce Dickinson, Esq., a lawyer based in Las Vegas who specializes in truck driving litigation, and who has retained Lew Grill's services on multiple occasions in various civil actions. ( Id. at 20.) In the interest of completeness, the Court permitted the introduction of this evidence over Defendants' objection, an objection that was based upon an asserted lack of notice sufficient to permit Defendants to prepare for— or even attend— Mr. Dickinson's deposition in Las Vegas. Mr. Dickinson provided very limited testimony, testimony that largely conformed with and supplemented David Dowling's description of Lew Grill as an ideal expert witness, and one whose testimony and role was essential in ongoing litigation in which Mr. Dickinson was engaged as counsel. Dickinson further testified that he had utilized Grill's services as an expert over a number of years, in multiple cases dating back to the mid 1980s— a time that predated Sage's existence as a company.
B. Lew Grill is a Renowned Figure in the Areas of Truck Driver Education and Safety, and His Involvement in Ongoing Education and Safety Projects is Important.
Plaintiffs next called Frank Molodecki. Molodecki testified that he has been involved in the trucking industry for more than 35 years, about 23 of which was spent as a driver. (October 16, 2012 N.T. at 26.) Molodecki was associated with Sage at its Billings, Montana location as a part-time instructor for approximately three years, and has more recently been transitioning into the area of truck driving safety. ( Id. ) Molodecki currently works for Diversified
Transfer and Storage, where he oversees the company's safety department, and helps to set policy, training, and safety goals for the company. ( Id. )
During the time he was employed by Sage in the late 1990s, Molodecki worked as a part-time instructor, helped to write curricula, and served on the company's advisory board. ( Id. at 27.) During this time, Molodecki became acquainted with Lew Grill, who became " an instrumental lead" in Molodecki's training and development as an instructor. ( Id. at 28.) Molodecki testified that Grill brings a rich constellation of skills and expertise to his various roles in the truck driving industry, including the experience of serving as a truck driver, the ability to communicate fluently with novice and expert alike, in addition to being a published author and recognized expert witness. According to Molodecki, he has never encountered another figure in the trucking industry with this combination of skill and experience. ( Id. )
Moving from the general to the specific, Molodecki next testified about a cooperative agreement that had been entered into between Sage and the Federal Motor Carrier Safety Administration (" FMCSA" )— an agreement that makes use of a peer review board on which Molodecki sits as a member. Molodecki testified that the cooperative agreement between Sage and the FMCSA was intended to study the effectiveness of fostering a culture of safety among motor carriers, with a particular focus on new entrants in the trucking industry, and ensuring that these new entrants receive sufficient safety training prior to operating on the roads. ( Id. at 31-33.) Molodecki said that Sage and the FMCSA were presently engaged in collecting a variety of data focused on training and safety, which would thereafter be assimilated, analyzed, and incorporated into future educational programming. ( Id. ) Molodecki testified that Lew Grill is the only person he knows of who is capable of performing the work remaining under the cooperative agreement. ( Id. at 33, 43-44.)
Molodecki further offered his opinion that if Sage is unable to complete the work remaining under the cooperative agreement, it was likely to have a negative impact on highway safety. In this regard, Molodecki reiterated his observations regarding the lack of experience that persists among many new entrants in the trucking industry, and the cooperative agreement represented a way of educating these drivers earlier in the process in order to instill and maintain a safety culture among inexperienced and experienced drivers alike. ( Id. at 34-35.) Molodecki also concluded that Sage's own reputation in the industry would be impaired if the company were unable to fulfill its obligations under the cooperative agreement. ( Id. at 36.)
Notwithstanding these dire predictions, in response to cross examination, Molodecki testified that if Sage retained Lew Grill as an independent contractor in order to complete any remaining obligations left under the cooperative agreement prior to its expiration in 2014, " it would probably mitigate [his concerns about public safety] to some extent." ( Id. at 47.) He acknowledged that " [t]he main thing is that it gets done and we get it done in a timely fashion." ( Id. at 47-48.) Ultimately, Mr. Molodecki summarized his view of this hypothetical proposal as follows: " If both parties are involved and were able to get to the end result of the initial, of the initial program and were able to get to the fact finding and ultimately, as I hope, will come into a federal rule-making, I think we're fine." ( Id. at 49.)
In summary, Molodecki agreed that his concerns regarding harm to ...