United States District Court, E.D. Pennsylvania
R. Sánchez, C.J.
Gregory Johnson seeks an advancement of litigation expenses
from his former employer, Defendant Farm Journal, Inc., for
the defense of a lawsuit it filed against him in the Western
District of Missouri (the Underlying Action). The Underlying
Action alleges Johnson, inter alia, stole trade secrets,
wrongly converted a Twitter account bearing his name, and
breached his fiduciary duty. Johnson has moved for a
preliminary injunction pursuant to Federal Rule of Civil
Procedure 65. In response, Farm Journal moved to transfer
venue pursuant to 28 U.S.C. § 1404(a) to the Western
District of Missouri where the Underlying Action is currently
pending, or, in the alternative, to dismiss Johnson's
advancement claim pursuant to Federal Rule of Civil Procedure
12(b)(6). For the reasons stated below, Johnson's motion
for a preliminary injunction will be denied and Farm
Journal's motion will be granted insofar as the
above-captioned case shall be transferred to the Western
District of Missouri.
Journal is “the nation's leading agricultural media
company” and has been in business for more than 140
years. Farm Journal is a Pennsylvania corporation and is
governed by its Amended and Restated Articles of
Incorporation (the Articles) and Amended and Restated Bylaws
(the Bylaws) in accordance with the Pennsylvania Business
Corporation Law (BCL). The Articles were enacted and filed
with the Pennsylvania Department of State on June 30, 1994.
See Decl. of James M. Heiser ¶ 3, June 3, 2019.
The Bylaws were enacted at an unknown later date as a result
of a merger, in which Farm Journal was the surviving
entity. See Decl. of Jeffrey Pence Ex. A,
at 1, May 20, 2019 (labeling the Bylaws “Exhibit C to
Agreement and Plan of Merger, ” but not providing any
identifying information regarding the merger).
receive advancement under both governing documents, the
person seeking advancement must be entitled to
indemnification. Farm Journal's Articles and Bylaws both
contain provisions regarding indemnification and advancement,
but neither governing document cross-references the other.
regard to indemnification, Farm Journal's Articles
[e]ach person who was or is made a party or is
threatened to be made a party to or is involved in any
action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter a
“proceeding”), by reason of the fact that he
or she, . . ., is or was a director, officer or
employee of the Corporation . . . whether the basis of
such proceeding is alleged action in an official
capacity . . . or in any other capacity . . . ,
shall be indemnified and held harmless by [Farm
Journal] to the fullest extent authorized by the
Pennsylvania Business Corporation Law . . . against all
expense, liability and loss . . . reasonably incurred or
suffered by such person in connection therewith and such
indemnification shall continue as to a person who has ceased
to be a director, officer, employee or agent . . . .
Compl. Ex. A, at 2 (emphasis added). The indemnification
right set forth in the Articles also includes a right to
[t]he right to indemnification conferred in this Section B
shall be a contract right and shall include the
right to be paid by the Corporation the expenses
incurred in defending any such proceeding in advance of
its final disposition; provided[, ]
however, that if the Pennsylvania Business
Corporation Law requires, the payment of such expenses
incurred by a director or officer in his or her capacity
as a director or officer (and not in any other
capacity in which service was or is rendered by such person
while a director or officer . . .) in advance of the
final disposition of a proceeding, shall be made
only upon delivery to the Corporation of an
undertaking by or on behalf of such director or
officer, to repay all amounts if it shall ultimately be
determined that such director or officer is not entitled to
be indemnified under this Section B or otherwise.
Id. at 2-3 (italic emphasis added).
Section 7.01(a) of the Bylaws, subject to certain exclusions
not at issue here, Farm Journal “shall indemnify an
indemnified representative against any liability incurred in
connection with any proceeding in which the indemnified
representative may be involved as a party or otherwise by
reason of the fact that such person is or was serving in an
indemnified capacity . . . .” Decl. of Jeffrey Pence Ex.
A, at 17. Section 7.01(d)(2) defines an “indemnified
any and all directors of the corporation and any other
person designated as an indemnified representative by the
board of directors of the corporation (which may, but
may not, include any person serving at the request of the
corporation, as a director, officer, employee,
agent, fiduciary, or trustee of any other corporation . . .).
Id. at 18 (emphasis added). With regard to
advancement, Section 7.03 provides that Farm Journal:
shall pay the expenses (including attorneys'
fees and disbursements) incurred in good faith by an
indemnified representative in advance of the final
disposition of a proceeding described in Section 7.01 .
. . upon receipt of an undertaking by or on behalf of the
indemnified representative to repay the amount if it is
ultimately determined . . . that such person is not entitled
to be indemnified . . . .
Id. (emphasis added).
agricultural media company, Farm Journal publishes a trade
publication known as The Packer. From December 2015
through July 2018, Johnson was an employee of Farm Journal
and an editor of The Packer. In July 2018, Johnson
left Farm Journal for employment with Blue Book Services,
Inc., a credit and marketing information agency. On February
8, 2019, Farm Journal filed the Underlying Action against
Johnson and Blue Book Services, alleging Johnson (1)
“surreptitiously copied more than 11, 000 files from
Farm Journal's internal computer network to a personal
‘DropBox' account, ” Compl. ¶ 13; (2)
attached a USB storage device to his Farm Journal laptop and
retrieved industry contact and source lists, see Id.
¶ 14; and (3) wrongfully converted a Twitter account
bearing his name with 2, 500 followers, see Id.
¶ 17-18. Johnson retained Chapman and Cutler LLP to
represent him in the Underlying Action.
March 28, 2019, Johnson demanded that Farm Journal advance
the actual and reasonable legal expenses he will incur in
connection with his defense of the Underlying Action pursuant
to the Articles. Farm Journal denied Johnson's demand for
advancement stating the advancement provisions of the
Articles do not apply and he is not entitled to advancement.
Following Farm Journal's denial of his advancement claim,
Johnson filed the instant action on May 6, 2019. On May 13,
2019, Johnson moved for a preliminary injunction. On May 20,
2019, Farm Journal moved to dismiss the Amended Complaint
pursuant to Federal Rule of Civil Procedure 12(b)(6). The
motions are now ripe for disposition.
Preliminary Injunction Motion
Court first turns to Johnson's motion for a preliminary
injunction. A plaintiff seeking a preliminary injunction must
establish “ that he is likely to succeed on the
merits,  that he is likely to suffer irreparable harm in
the absence of preliminary relief,  that the balance of
equities tips in his favor, and  that an injunction is in
the public interest.” Winter v. Natural Res. Def.
Council Inc., 555 U.S. 7, 20 (2008). A court may not
grant injunctive relief, “regardless of what the
equities require, ” unless the plaintiff establishes
both a likelihood of success and irreparable harm. See
Adams v. Freedom Forge Corp., 204 F.3d 475, 486 (3d Cir.
2000). The plaintiff's already difficult burden
is further heightened in cases where, as here, the plaintiff
is asking the Court to order the defendant to affirmatively
act. See Bennington Foods LLC v. St. Croix Renaissance,
Grp., LLP, 528 F.3d 176, 179 (3d Cir. 2008)
(“[W]here the relief ordered by the preliminary
injunction is mandatory and will alter the status quo, the
party seeking the injunction must meet a higher standard of
showing irreparable ...