MWK Recruiting, Inc. v. Jowers

MWK RECRUITING, INC., Plaintiff, v. EVAN P. JOWERS, YULIYA VINOKUROVA,LEGIS VENTURES (HK) COMPANY LIMITED, and ALEJANDRO VARGAS, Defendants.

EVAN P. JOWERS, Counterclaimant/Third-Party Claimant, v. MWK RECRUITING, INC., Counterdefendant,ROBERT E. KINNEY, MICHELLE W. KINNEY, RECRUITING PARTNERS GP, INC.,

KINNEY RECRUITING LLC, COUNSEL UNLIMITED LLC,

and KINNEY RECRUITING LIMITED, Third-Party Defendants.

1:18-CV-444-RP

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TEXAS AUSTIN DIVISION

July 30, 2020

ORDER

Before the Court is Plaintiff/Counterdefendant MWK Recruiting, Inc.'s ("MWK") and Counterdefendants Robert E. Kinney ("Kinney"), Michelle W. Kinney, Recruiting Partners GP, Inc., Kinney Recruiting LLC, Counsel Unlimited LLC, and Kinney Recruiting Limited's¹ motion to withdraw their jury demand and strike Defendant/Counterclaimant Evan P. Jowers's ("Jowers") jurydemand, (Mot. Strike, Dkt. 131), and accompanying briefing, (Resp., Dkt. 138; Reply, Dkt. 140).² After considering the parties' arguments, the record, and the relevant law, the Court grants the motion.

I. BACKGROUND

The Court presumes the parties' familiarity with this "complex and unusually contentious case." Bear Ranch, LLC v. Heartbrand Beef, Inc., No. 6:12-CV-14, 2016 WL 1588312, at *1 (S.D. Tex. Apr. 20, 2016) (Costa, Circuit J.). Suffice it to say that the case involves Defendant/Counterplaintiff Evan P. Jowers's ("Jowers") departure from MWK, a legal recruiting firm. (See 2d Am. Compl., Dkt. 80). Jowers worked for the MWK Entities for several years; now, the MWK Entities accuse Jowers of appropriating their confidential information and breaching contracts. (Id. at 31-45). Jowers in turn accuses the MWK Entities of a number of "illegal, tortious, and bad faith acts." (2d Am. Ans. & Countercls, Dkt. 135, at 43-71).

In their motion now before the Court, the MWK Entities ask the Court to allow them to withdraw the jury demand in their second amended complaint, (Dkt. 80 at 47), and strike Jowers's own jury demand, (2d Am. Ans. & Countercls., Dkt. 135, at 72). (Mot. Strike, Dkt. 131, at 7).³ They maintain that Jowers waived his right to a jury trial in his employment agreement with Kinney Recruiting Limited and in his loan agreement from Counsel Unlimited LLC. (Id. at 7-8; see Employment Agreement, Dkt. 131-2, at 6; Loan Agreement, Dkt. 131-3, at 22-23). Each agreement is governed by Florida law. (See Order, Dkt. 87, at 11). Jowers responds that the MWK entities abandoned the jury waivers by previously insisting on a jury trial, that only MWK itself has standing to enforce the waivers, and that the waivers are not enforceable at all. (Resp. Mot. Strike, Dkt. 138, at 2-3). The Court agrees with the MWK entities, finding that the jury waivers are validand that the MWK entities may invoke and enforce them. Jowers is not entitled to a trial by jury on any claim in this case.

II. ANALYSIS

A. Are the Jury Waiver Provisions Valid?

First, the Court must determine if the jury waiver provisions can be invoked and enforced in the first place—in other words, whether they are valid. After reviewing the provisions and the applicable law, the Court concludes that they are.

Federal law determines the right to a jury trial in federal-court diversity cases. Simler v. Connor, 372 U.S. 221, 222 (1963). "Although the right of trial by jury in civil actions is protected by the Seventh Amendment to the Constitution, that right, like other constitutional rights, may be waived by prior written agreement of the parties." RDO Fin. Servs. Co. v. Powell, 191 F. Supp. 2d 811, 813 (N.D. Tex. 2002). Even so, courts should "indulge every reasonable presumption against waiver." Aetna Ins. Co. v. Kennedy ex rel. Bogash, 301 U.S. 389, 393 (1937). Drawing on persuasive precedent from across the country, Fifth Circuit courts generally require jury waivers to have been knowing and voluntary to be enforceable. See Crescent Res. Litig. Tr. ex rel. Bensimon v. Duke Energy Corp., No. A-12-CA-009-SS, 2013 WL 1865450, at *6 (W.D. Tex. May 2, 2013) (collecting cases); RDO, 191 F. Supp. 2d at 813 & n.8 (same); see also K.M.C. Co. v. Irving Trust Co., 757 F.2d 752, 756 (6th Cir. 1985) ("Those cases in which the validity of a contractual waiver of jury trial has been in issue have overwhelmingly applied the knowing and voluntary standard."). "The Fifth Circuit has not specifically spoken on the standard for contractual jury waivers, but has endorsed the voluntary and knowing standard for jury waivers generally." Bensimon, 2013 WL 1865450, at *6 (citing Jennings v. McCormick, 154 F.3d 542, 545 (5th Cir. 1998)). Following the lead of its fellow courts, this Court applies the knowing and voluntary standard.

Similarly, though the Fifth Circuit has not specifically opined on the issue of which party bears the burden of proof, the Court will follow other Fifth Circuit district courts in concluding that the party seeking to enforce the waiver bears that burden. Id.; RDO, 191 F. Supp. 2d at 813. And, like those courts, to evaluate whether a waiver was made knowingly and voluntarily, the Court will consider factors including "(1) whether there was gross disparity in bargaining power between the parties; (2) the business or professional experience of the party opposing the waiver; (3) whether the opposing party had an opportunity to negotiate contract terms; and (4) whether the clause containing the waiver was inconspicuous." RDO, 191 F. Supp. 2d at 813-14.

So, the MWK Entities bear the burden of proof in showing that Jowers signed the jury waiver provisions in the employment agreement and loan agreement knowingly and voluntarily. The Court finds that they have carried this burden.

1. Gross Disparity in Bargaining Power

First, there was no gross disparity in bargaining power between any of the MWK Entities and Jowers. "To invalidate a waiver provision . . . the bargaining differential must be the kind of extreme bargaining disadvantage or gross disparity in bargaining position that occurs in certain exceptional situations." Westside-Marrero Jeep Eagle, Inc. v. Chrysler Corp., 56 F. Supp. 2d 694, 709 (E.D. La. 1999); accord, e.g., Servicios Comerciales Lamosa, S.A. de C.V. v. De la Rosa, 328 F. Supp. 3d 598, 622 (N.D. Tex. 2018); BMC Software, Inc. v. Int'l Bus. Machines Corp., No. CV H-17-2254, 2018 WL 7291425, at *3 (S.D. Tex. Aug. 30, 2018); Zavala v. Aaron's, Inc., No. 4:15-CV-123, 2015 WL 5604766, at *3 (E.D. Tex. Sept. 23, 2015). However, "the inherent disparity in bargaining relationships that is the consequence of normal employer-employee relations does not automatically render a waiver involuntary." Jones v. Tubal-Cain Hydraulic Sols., Inc., No. 4:16-CV-01282, 2017 WL 3887235, at *3 (S.D. Tex. Sept. 5, 2017). And "[e]ven in the context of employment, a 'take it or leave it' situation alone does not make the waiver unenforceable or unconscionable." Zavala, 2015WL 5604766, at *3. Fifth Circuit courts have often found, though, that a unilateral jury waiver suggests a sufficient disparity of bargaining power. See, e.g., id. at *3-4.

Though Jowers argues that "Kinney knew that [he] was in a precarious personal condition" at the time the employment agreement was signed and "purposefully took advantage of it," and that Kinney threatened him with unlawful refusal to pay what he was owed and the possibility of a "frivolous lawsuit," (Resp., Dkt. 138, at 10-11), Jowers was free to go elsewhere for employment if he disliked the terms of the contract or the process of its negotiation. See Westside-Marrero, 56 F. Supp. 2d at 709 ("[P]laintiffs clearly felt considerable pressure to obtain financing for the Laplace dealership. But they have produced no evidence that they could not have gone elsewhere for financing had they found CFC's terms oppressive."). Notably, Jowers does not assert any disparity in bargaining power related to the jury waiver provision in the loan agreement. (See Resp., Dkt. 138, at 10-11). And both jury waiver provisions were bilateral. Ultimately, Kinney, Kinney Recruiting Limited, and Counsel Unlimited LLC "in no way deprived [Jowers] of his freedom in presenting him with the . . . agreements." Westside-Marrero, 56 F. Supp. 2d at 709. To the extent that Jowers colorably asserts he was under duress when signing either or both the employment agreement and the loan agreement because of Kinney's threats, under Florida law, "threatened action cannot constitute duress, when there are adequate legal remedies available with which to challenge it."⁴ Peralta v. Peralta Food Corp., 506 F. Supp. 2d 1274, 1282 (S.D. Fla. 2007) (quoting City of Miami v. Kory, 394 So. 2d 494, 499 (Fla. Dist. Ct. App. 1981)).

2. Business or Professional Experience

Second, Jowers had ample business and professional experience at the time he decided to sign the employment and loans agreements. Jowers is a lawyer. (Resp., Dkt. 11, at 11). Despitehaving had no "relevant experience reviewing employment contracts" at the time he signed his own," (id.), a lawyer of any kind can safely be assumed to have some level of general knowledge of contracts. The fact that Jowers "was not an active attorney at the time," (id.), does not mean that he did not have the benefit of his prior legal training and experience. Furthermore, Jowers is a professional legal recruiter—by his own account, an accomplished one to boot. (Am. Answer, Dkt. 96, at 45). Perhaps that has little bearing on the employment agreement he signed at the beginning of his legal recruiting career. But it can also be safely assumed that years later, when he signed the loan agreement, he had the business and professional experience necessary to evaluate it. Jowers's own arguments over the course of this case contradict any possible argument now that he did not possess such experience.

3. Opportunity to Negotiate

Third, Jowers had sufficient opportunity to negotiate the jury waiver provisions. "In determining the negotiability of a contract, courts consider whether there was...