First Star Logistics, LLC. v. Victores

First Star Logistics, LLC., Plaintiff, v. Raul Ronald Victores, et al. Defendants.

Case No.: 1:18-cv-00202

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION

September 29, 2019

Judge Michael R. Barrett

OPINION AND ORDER

This matter is before the Court on Plaintiff's Motion for Leave to File a First Amended Complaint (Doc. 13) and Plaintiff's Motion for Summary Judgment. (Doc. 22).

Also pending before the Court are Plaintiff's Motion for a Temporary Restraining Order (Doc. 3), Defendant American Ridgeback, LLC's ("Ridgeback") Motion to Dismiss (Doc. 4), and Defendant Bullhead Logistics, LLC's ("Bullhead") Motion for a More Definite Statement (Doc. 8).

I. MOTION TO AMEND

Federal Rule of Civil Procedure 15 provides that, once the time period for amending a pleading as a matter of right has passed, "a party may amend its pleading only with the opposing party's written consent or the court's leave" and "[t]he court should freely give leave when justice so requires." FED. R. CIV. P. 15(a)(2). When deciding whether to grant such a motion, the court should consider "[u]ndue delay in filing, lack of notice to the opposing party, bad faith by the moving party, repeated failure to cure deficiencies by previous amendments, undue prejudice to the opposing party, and futility of amendment." Wade v. Knoxville Utilities Bd., 259 F.3d 452, 458-59 (6th Cir. 2001) (quoting Head v. Jellico Hous. Auth., 870 F.2d 1117, 1123 (6th Cir. 1989)). "Delay by itself is not sufficient reason to deny a motion to amend" and "[n]otice and substantial prejudice to the opposing party are critical factors in determining whether an amendment should be granted." Id.

Plaintiff filed its Motion to Amend early in the proceedings and shortly after Defendants filed their Motion to Dismiss and Motion for a More Definite Statement, and Plaintiff did so in an effort to address the allegations in the Motion to Dismiss. (Doc. 14). Moreover, Plaintiff's counsel discussed its Motion to Amend with Defendants' former counsel prior to his withdrawal as attorney of record. (Id.). For good cause shown, and based on the facts of this case, Plaintiff's Motion for Leave to File a First Amended Complaint (Doc. 13) is GRANTED. The Court will consider Plaintiff's First Amended Complaint. (Doc. 12).

II. MOTION FOR SUMMARY JUDGMENT

a. Procedural Background

Plaintiff originally brought this action in the Hamilton County Court of Common Pleas, Hamilton County, Ohio. (Doc. 1). Defendant Raul Ronald Victores ("Victores") removed the matter to the United States District Court for the Southern District of Ohio Western Division. (Id.). After filing Defendant Ridgeback's Motion to Dismiss (Doc. 4) and Defendant Bullhead's Motion for a More Definite Statement (Doc. 8), counsel for all three Defendants moved to withdraw as the attorney of record for Defendants. (Doc. 15). TheCourt granted Defendants' counsel's motion after a hearing on the matter. (Docs. 16, 17). Thereafter, the Court held a show cause hearing regarding Defendants' efforts, if any, to retain new counsel. Defendants made no appearance at that hearing and remain unrepresented. Plaintiff filed its Motion for Summary Judgment. (Doc. 22). Defendants have not filed an opposition.

b. Factual Background

Defendants have not disputed the following facts found in Plaintiff's First Amended Complaint and exhibits attached to Plaintiff's Motion for Summary Judgment (Docs. 12, 22-1). Plaintiff is a property broker, or freight broker, registered with the Federal Motor Carrier Safety Administration. In short, Plaintiff is a third-party logistics company that provides freight transportation solutions to customers. Plaintiff does not deliver goods itself; rather, it contracts with sales agents to deliver goods and provides all administrative services for those sales agents.

Defendants Victores and Bullhead¹ were such sales agents. Defendant Victores entered into a Sales Agent Agreement with Plaintiff on August 12, 2013 and Defendant Bullhead entered into a Sales Agent Agreement, executed by Victores, with Plaintiff on May 8, 2017. Attached to those Sales Agent Agreements were Confidentiality, Non-Solicitation and Non-Recruitment Agreements.

Pursuant to the Sales Agent Agreements, Plaintiff contracted with Defendants Victores and Bullhead as agents for a variety of services including, among others, providing and managing motor carrier brokerage services and a broad range of transportation services. In particular, Defendants Victores and Bullhead agreed:

• to follow the rules and regulations of Plaintiff's Policy and Procedure Manual;

• to obtain credit approval from Plaintiff before booking transportation services for a customer using Plaintiff's resources;

• that all decisions regarding credit approval were solely within Plaintiff's discretion;

• that Victores and Bullhead had no authority to request or accept payments for services from customers on Plaintiff's behalf;

• that Victores and Bullhead would be liable for any accounts receivable that were uncollected as a result of the agent's negligence, breach of the Agreement(s) or failure to adhere to Plaintiff's policies and procedures; and

• that they would be liable to refund Plaintiff for all commissions paid for which Plaintiff did not ultimately collected from a customer.

Pursuant to the Confidentiality, Non-Solicitation and Non-Recruitment Agreements, Defendants Victores and Bullhead agreed that:

• the Non-Solicitation Agreements would apply for the duration of both Sales Agent Agreements and for a period of 365 days after the termination of the Sales Agent Agreements;

• Victores and Bullhead would receive certain confidential information from Plaintiff as part of their business relationship which included the identity of Plaintiff's customers and suppliers and the prices that Plaintiff charged for its services;

? such information would be considered the "trade secrets" of plaintiff and Victores and Bullhead would not disclose or improperly use such information;

• Victores and Bullhead would not solicit Plaintiff's customers—present or prospective;

• the solicitation prohibition applied to Victores' and Bullheads' owners employees, officers, directors and representatives; and

• if the solicitation prohibition was breached, Plaintiff would suffer irreparable harm and could seek injunctive relief, fees and costs for bringing an action to remedy a breach, and/or pecuniary damages.

In August 2017, Defendant Victores' wife formed Defendant Ridgeback which operated as a federally licensed property broker. Defendant Ridgeback, as a freight broker, became a direct competitor of Plaintiff.

In December 2017, Plaintiff audited Defendants Victors and Bullhead and, in that process, discovered that Defendants had entered loads, connected with eight accounts, without obtaining credit approval from Plaintiff and received commissions from Plaintiff for the transportation of those loads. Moreover, Plaintiff billed each of the eight accountsfor the transportation services that Defendants Victores and Bullhead arranged and those transportation charges totaled $130,138.98. None of the accounts paid Plaintiff; rather, accounts paid Defendants Victores and Bullhead. Defendants Victores and Bullhead, thus, kept the commission they received from Plaintiff and the payments from the eight accounts.

Also in December 2017, Plaintiff discovered that Defendant Victores was both working as a sales agent for Defendant Ridgeback and diverting accounts away from Plaintiff to Defendant Ridgeback. For example, Defendant Victores, using confidential information he had access to by virtue of his Sales Agent Agreement with Plaintiff, diverted Plaintiff's client, Holthouse Farms, to Defendant Ridgeback. Plaintiff terminated Defendant Victores' and Bullhead's Sales Agent Agreements as a result.

Plaintiff seeks summary judgment against Defendants Victores and Bullhead regarding its claims for breach of contract and tortious interference with contractual or business relations. (Doc. 22 at PageID 483). Plaintiff requests a judgment against Defendants Victores and Bullhead in the amount of $130,138.98 and injunctive relief against all three Defendants. (Id. at PageID 484).

c. Standard of Review

Summary judgment is appropriate "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a). A dispute is "genuine" when "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is "material" only if its resolution affects the outcome of the suit. Id. On summary judgment, a court must view the evidence and draw allreasonable inferences in favor of the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The moving party has the burden of showing an absence of evidence to support the non-moving party's case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). Once the moving party has met its burden of production, the non-moving party cannot rest on its pleadings, but must present significant probative evidence in support of its complaint to defeat the motion for summary judgment. Anderson, 477 U.S. at 248-49.

However, even where a motion for summary judgment is unopposed, the court must review the portions of the record submitted by the moving party to determine whether a genuine dispute of material fact exists. F.T.C. v. E.M.A. Nationwide, Inc., 767 F.3d 611, 629 (6th Cir. 2014). Accord: Smith v. Hudson, 600 F.2d 60, 64 (6th Cir. 1979) ("A party is never required to respond to a motion for summary judgment in order to prevail since the burden of establishing the nonexistence of a material factual dispute always rests with the movant."). Cf. S.D. Ohio Civ. Rule 7.2(a)(2) ("Failure to file a memorandum in opposition may result in the granting of any motion that would not result directly...