Deep S. Commc'ns, LLC v. Fellegy

652 F.Supp.3d 636

DEEP SOUTH COMMUNICATIONS, LLC v. Peter M. FELLEGY.

CIVIL ACTION NO. 22-598-JWD-EWD

United States District Court, M.D. Louisiana

Signed January 23, 2023

Jennifer Lynn Anderson, Baker Donelson Bearman Caldwell & Berkowitz, Baton Rouge, LA, Emily Olivier Kesler, Baker Donelson, New Orleans, LA, for Deep South Communications, LLC.

Andrew Phelps Burnside, Ogletree, Deakins, Nash, Smoak & Stewart PC, New Orleans, LA, Michelle Renee Maslowski, Pro Hac Vice, Maslowski Law, Indianapolis, IN, for Peter M. Fellegy.

RULING AND ORDER

JOHN W. deGRAVELLES, UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

This matter comes before the Court on two motions. First, Plaintiff Deep South Communications, LLC ("Deep South" or "Plaintiff") has filed the Plaintiff's Motion for a Temporary Restraining Order and Preliminary Injunctive Relief ("Motion for TRO") (Doc. 8). Then, in response to briefing schedules from this Court, Defendant Peter M. Fellegy ("Fellegy" or "Defendant") submitted two filings: (1) Defendant's Rule 12(b)(2) Motion to Dismiss Plaintiff's Complaint for Lack of Personal Jurisdiction and Rule 12(b)(6) Motion to Dismiss Plaintiff's Complaint for Failure to State a Claim ("Motion to Dismiss") (Doc. 16); and (2) Defendant's Opposition to Deep South's Motion for a [TRO] ("Defendant's Opposition") (Doc. 17). Plaintiff then filed: (1) an Opposition to Defendant's [Motion to Dismiss] ("Plaintiff's Opposition") (Doc. 20); and (2) a Memorandum in Reply to Defendant's Opposition to [Motion for TRO] ("Plaintiff's Reply") (Doc. 23).

A hearing on both motions was originally scheduled for October 26, 2022. (Doc. 15.) However, Defendant filed a motion to continue the hearing, and on October 25, 2022, the Court held a status conference during which it granted that motion and ordered the hearing to be reset for November 2, 2022. (Doc. 36.) At that time, the Court additionally ordered the parties to exchange their proposed exhibits for the hearing and granted the parties leave to submit supplemental briefing on those proposed exhibits to address their impact, if any, on the issue of personal jurisdiction. (Id.)

On November 2, 2022, a hearing was held on Plaintiff's Motion for TRO, (Doc. 8), and Defendant's Motion to Dismiss, (Doc. 16). (See Doc. 45.) Subsequently, the parties requested a transcript of the hearing and filed additional briefs addressing the issues raised by the Motion for TRO and the issue of personal jurisdiction. (Docs. 51, 52.) Thereafter, both parties responded to the other's post-hearing brief by filing reply briefs. (Docs. 54, 55.)

Having carefully considered the law, the facts in the record, and the arguments and submissions of the parties, the Court finds that personal jurisdiction over Defendant exists, that Plaintiff has adequately stated a claim for relief in the operative complaint on all claims except one, and that Plaintiff has not met its burden in proving it is entitled to a temporary restraining order. Accordingly, the Court will deny in part and grant in part the Motion to Dismiss and deny the Motion for TRO in its entirety.

II. RELEVANT BACKGROUND

This case arises out of a contractual dispute between a Louisiana employer and its former employee, a nonresident of Louisiana. Plaintiff, Deep South, is a "wireless technologies services company that was founded and remains headquartered in Baton Rouge, Louisiana." (V. Compl. ¶ 6, Doc. 1.) "Deep South operates throughout the state of Louisiana and throughout the United States." (Id. ¶ 7.) Defendant, Fellegy, began employment with Deep South in May 2017 and continued working there until his resignation on February 22, 2022. (Id. ¶¶ 8-9.) Fellegy was initially hired as the "Vice President of Business Development" and continued in that role until becoming the "Manager of Business Development." (Id.) His general responsibilities included "developing and maintaining relationships and sales for the benefit of the company, generating "sales and business development leads," providing and compiling "feedback regarding clients," and "helping create overall business development strategies." (Id. ¶ 12.)

As a citizen of the state of Indiana, Fellegy worked remotely during his employment with Deep South, but "regularly traveled to Louisiana during his employment" as "his position was based out of Deep South's headquarters in Baton Rouge, Louisiana." (Id. ¶¶ 10-11.) As a condition of his employment with Deep South, Defendant entered into a Confidentiality and Restrictive Covenant Agreement (the "Agreement") on May 18, 2017. (Id. ¶ 16-17.) Defendant did not sign the Agreement in Louisiana; rather, he signed this Agreement in Florida before emailing it back to Deep South. (Decl. of Rhett Westerman, Ex. A, ¶ 12, Doc. 20-1.) The Agreement contained, among other things, provisions regarding non-competition, non-solicitation, and non-disclosure of confidential information. (The Agreement, §§ 4, 5, Doc. 8-4.)

Several months after Defendant's resignation from Deep South, he began working for End 2 End Technologies ("End 2 End"). (V. Compl. ¶ 30, Doc. 1.) According to the Verified Complaint, End 2 End "holds itself out as a network infrastructure specialist" and "competes directly with Deep South throughout the United States." (Id. ¶¶ 31-32.) Also relevant to this cause of action is General Electric Co. ("GE"), a former potential customer of Deep South, the specifics of whose involvement will be discussed below. (See id. ¶¶ 34-36.)

A. Claims for Relief, Prayer, and the Instant Motions

Plaintiff filed the instant action against Defendant for breach of contract, alleging that Defendant violated the Agreement after his resignation from Deep South. (V. Compl. ¶¶ 49-100, Doc. 1.) More specifically, Plaintiff first claims that Fellegy's employment with End 2 End constitutes a breach of the Agreement's non-compete clause. (Id. ¶¶ 49-64.) Second, Plaintiff claims a violation of the non-solicitation clause because Defendant allegedly "has solicited, induced, and diverted Deep South customers and their business for his and [End 2 End]'s benefit since his resignation, including the business of GE." (Id. ¶ 76.) Third, Plaintiff alleges Defendant "used Deep South's Confidential Information" to procure a benefit for his new employer in violation of the non-disclosure of confidential information provision. (Id. ¶ 89.) Deep South seeks both injunctive relief, (id. ¶¶ 101-108), and damages, including damages for lost profits, as well as costs and attorney's fees (id. at 16-17).

In seeking injunctive relief, Plaintiff prays for "a temporary restraining order, preliminary injunction, and permanent injunction" prohibiting "Fellegy and all persons or entities acting in concert with him" from: (1) further violating the Agreement; (2) servicing, soliciting, or attempting to solicit any customer of Deep South for whom Fellegy had responsibility or was privy to information about while employed at Deep South; (3) divulging, revealing, communicating, using, or permitting use of Deep South's confidential information. (Id. at 15-16.)

On September 26, 2022, Plaintiff filed the instant Motion for TRO requesting an order "to enforce certain contractual obligations pursuant to the Confidentiality and Restrictive Covenant Agreement ... including Fellegy's obligation not to compete with Deep South, his obligation not to solicit Deep South's clients, and his obligation not to use or exploit Deep South's confidential information." (Doc. 8 at 1.) In response, Defendant filed, inter alia, the instant Motion to Dismiss, seeking dismissal under Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction and Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim. (Doc. 16.)

III. APPLICATION OF LOUISIANA LAW

As a preliminary matter, the Court must address whether Louisiana law governs the instant dispute. Resolution of this issue turns on: (1) the validity of the choice-of-law clause contained in the parties' Agreement; and, if that clause is not valid, then (2) choice-of-law principles.

Here, the relevant choice-of-law clause provides: "This Agreement shall be governed exclusively by the law of the State of Louisiana and/or applicable federal law, without regard to conflicts of laws principles." (The Agreement, § 12, Doc. 8-4.) With respect to employers' use of choice-of-forum and choice-of-law clauses in employment contracts, Louisiana law provides:

The provisions of every employment contract or agreement, or provisions thereof, by which any foreign or domestic employer or any other person or entity includes a choice of forum clause or choice of law clause in an employee's contract of employment or collective bargaining agreement, or attempts to enforce either a choice of forum clause or choice of law clause in any civil or administrative action involving an employee, shall be null and void except where the choice of forum clause or choice of law clause is expressly, knowingly, and voluntarily agreed to and ratified by the employee after the occurrence of the incident which is the subject of the civil or administrative action.

La. R.S. 23:921(A)(2) (emphasis added).

Defendant asserts that, because he did not ratify the Agreement's choice-of-law clause, La. R.S. 23:921(A)(2) renders it unenforceable. (Doc. 16-1 at 8; Doc. 17 at 9.) As a result, he contends that Louisiana law does not govern the interpretation of the Agreement and that the choice-of-law clause cannot be considered for purposes of personal jurisdiction. Instead, "a choice-of-law analysis should be completed" to determine the applicable substantive law. (Doc. 17 at 9.) In response, Plaintiff argues that Section 921(A)(2) only applies to and for the protection of employees who are Louisiana citizens; the statutory provision is not meant "for nonresidents to use to repudiate their choice of Louisiana law agreements entered into with Louisiana citizens such as Deep South." (Doc. 20 at 11; Doc. 23 at 4.)

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