Roadrunner Intermodal Servs., LLC v. T.G.S. Transp., Inc.

ROADRUNNER INTERMODAL SERVICES, LLC, a Delaware limited liability company, Plaintiff, v. T.G.S. TRANSPORTATION, INC., a California corporation, and DOES 1-10, Defendants.

JEFFREY COX, Plaintiff, v. ROADRUNNER INTERMODAL SERVICES, LLC,

a Delaware limited liability company, CENTRAL CAL TRANSPORTATION, LLC,

a Delaware limited liability company, and DOES 1 through 50, Defendants.

ROADRUNNER INTERMODAL SERVICES, LLC, a Delaware limited liability company, Counter-Plaintiff and Defendant, v. JEFFREY COX, Counter-Defendant and Plaintiff.

No.: 1:17-cv-01207-DAD-BAM

No.: 1:17-cv-01056-DAD-BAM (consolidated)

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF CALIFORNIA

August 21, 2019

ORDER GRANTING IN PART AND DENYING IN PART ROADRUNNER'S MOTION FOR SUMMARY JUDGMENT AS TO PLAINTIFF JEFFREY COX'S CLAIMS

(Doc. No. 175)

Before the court is Roadrunner's motion for summary judgment as to Jeffrey Cox's claims. (Doc. No. 175.) A hearing on this motion was held on April 2, 2019. Attorney Michelle DuCharme appeared at the hearing on behalf of defendant and counter-plaintiff Roadrunner Intermodal Services, LLC ("Roadrunner") and defendant Central Cal Transportation ("Central Cal") (hereinafter collectively referred to as "Roadrunner"). Attorneys Howard Sagaser and Ian Wieland appeared on behalf of plaintiff and counter-defendant Jeffrey Cox ("Cox"). Having reviewed the parties' briefing and heard oral argument, and for the reasons that follow, Roadrunner's motion for summary judgment will be granted in part and denied in part.

FACTUAL BACKGROUND

The factual background of this case has been discussed in this court's prior orders denying Roadrunner's motion for a preliminary injunction and denying Cox's partial motion for summary judgment. (See Doc. Nos. 90 at 2-4; 199 at 2-4.) That background will not be repeated here in its entirety. Only those facts relevant to the disposition of the pending motion for summary judgment will be discussed below.¹

Roadrunner is an industry leader in providing regional and national drayage services throughout the United States. (Doc. No. 22 at 3.) Central Cal is a smaller, regional trucking company that operates trucking routes within California, Nevada, and Oregon for clients throughout the country. (See Doc. No. 98 at ¶¶ 5-6.) Cox was previously a co-owner of CentralCal, along with David Chidester ("Chidester"). (See Doc. No. 175 at 7.) On November 2, 2012, Roadrunner, Central Cal, Cox, and Chidester entered into a stock purchase agreement ("SPA") in which Roadrunner purchased all of the stock and assets of Central Cal and Double C Transportation, another trucking company, for approximately $3.8 million. (See Doc. No. 90 at 2-4.) The SPA included a provision calling for an earn-out payment to Cox if certain parameters regarding the companies' earnings were met. (Id. at 3.) Additionally, the SPA included non-competition, non-solicitation, and non-disclosure provisions that limited Cox's conduct in the future, at least through December 31, 2017. (See Doc. No. 199 at 3.)

Cox began working for Central Cal after it was sold to Roadrunner and retained his role as Vice President of Operations. (Doc. No. 181 at 8.) While employed at Central Cal, Cox believed that he did not receive the earn-out payments that he was due under the SPA and began both questioning company executives and conducting a personal investigation into the matter. (Id. at 8. ) Cox's complaints regarding accounting irregularities began in 2013. (See Doc. No. 175 at 9.)

On September 20, 2016, Cox sent an email to three Roadrunner executives (Judy Vijums, Peter Armbruster, and Ben Kirkland) detailing perceived inaccuracies in the accounting and financial information for Central Cal that Cox had received from Roadrunner. (See Doc. No. 181-2 at 6-7.) The email stated that Cox's former partner, Chidester, had received accounting and financial information that was contradictory to what Cox had received. (Id. at 6.) The email also stated that, from Cox's perspective, Roadrunner was violating the SPA and had provided false or inaccurate information in its filings with the Securities and Exchange Commission ("SEC"). (Id. at 6-7.) Finally, the email demanded complete and accurate accounting and financial information from Roadrunner for the fiscal years of 2012 through 2016. (Id. at 7.)

By November 10, 2016, Cox had retained counsel, who sent a demand letter to the aforementioned Roadrunner executives. (See Doc. No. 181-2 at 9-11, hereinafter referred to as the "Wieland demand letter.") The Wieland demand letter repeated many of the concerns and allegations set forth in Cox's September 20, 2016 email and demanded explanations for the earn-out payments and other information, including accounting and financial documentation. (Id. at 9. ) The Wieland demand letter also stated that Cox had been informed by credible sources thatRoadrunner falsely reported profits during the fiscal years at issue, thus calling into question the accuracy of Roadrunner's audits and SEC filings. (Id. at 10.)

In December 2016, Cox was removed from his role as Vice President of Operations at Central Cal and moved to a position on the sales team at Roadrunner; however, the parties dispute the exact title change and whether it constituted a demotion. (See Doc. Nos. 175 at 10; 181 at 9.) Though Cox's compensation remained the same, Cox alleges that the position change stripped him of his operational authority and denied him access to accounting and financial records. (Id.)

In the first quarter of 2017, Central Cal's revenue was below expectations. (See Doc. No. 175-1 at 4.) On or about January 30, 2017, Roadrunner publicly admitted that it had become aware of various accounting discrepancies within the company, and that the public should not rely on various financial statements and associated reports previously filed with the SEC. (See Doc. No. 181 at 9.) On February 17, 2017, Cox and another individual initiated a suit against Roadrunner over issues related to the earn-out payments. (Id.) In April 2017, Roadrunner began implementing cutbacks and lay-offs as a response to Central Cal's revenue reports. (See Doc. No. 175-1 at 4.) On May 9, 2017, the parties to this action unsuccessfully attempted to resolve the suit in a voluntary mediation. (See Doc. No. 181 at 9.) In a mediation brief, Cox stated his belief that Roadrunner violated the law by failing to pay the earn-out payments and contended that Roadrunner had reported fraudulent financial information to the SEC. (See Doc. No. 98 at 13.)

On May 31, 2017, Cox was terminated from Central Cal. (Id. at 9.) Cox states that he performed work on May 31, 2017 prior to being terminated and was not paid for that work. (Id. at 24-25.) Additionally, Cox's final itemized wage statement reflected alleged inaccuracies and/or typographical errors. (Id. at 26-27.) Cox also alleges that on or about July 7, 2017, following his termination, certain Roadrunner employees made defamatory statements about him. (Id. at 22.)

Cox accepted employment with T.G.S. Transportation, Inc. ("T.G.S.") beginning in July 2017. (See Doc. No. 90 at 3.) On July 11, 2017, Roadrunner authorized attorney Nicole Goodwin to send correspondence to T.G.S. regarding Cox's employment with the company. (See Doc. No. 175-11, hereinafter referred to as the "Goodwin demand letter.") The Goodwin demandletter stated that Cox was contractually prohibited from attempting to employ Roadrunner's employees, inducing any of Roadrunner's employees to leave Roadrunner, and/or soliciting any of Roadrunner's customers until December 31, 2017. (Id.; see also Doc. No. 175 at 11.)

On July 25, 2017, Cox filed a complaint in Fresno County Superior Court asserting causes of action related to his allegedly wrongful termination. (See Doc. No. 90 at 3.) Roadrunner filed its action against T.G.S. in this court on August 7, 2017. On February 7, 2018, the undersigned denied Roadrunner's motion for a preliminary injunction, granted T.G.S.'s motion to consolidate this case with Cox v. Roadrunner Intermodal Services, LLC, et al., No. 1:17-cv-01207-DAD-BAM (E.D. Cal.), and granted Cox's motion to intervene. (See Doc. No. 90.) Additionally, on March 28, 2019, the court denied Cox's motion for partial summary judgment on his ninth cause of action, which sought a declaratory judgment regarding the legality of the non-competition provisions of the parties' SPA. (See Doc. No. 199.)²

This action now proceeds on Cox's first amended complaint ("FAC") against Roadrunner, Central Cal, and unidentified Doe defendants. (Doc. No. 98.) On May 10, 2018, both Roadrunner and Central Cal filed answers to Cox's FAC, and Roadrunner also filed a counterclaim. (Doc. Nos. 107, 108.) Roadrunner filed a motion for summary judgment as to Cox's claims against it on February 19, 2019. (Doc. No. 175.)³ Cox filed an opposition onMarch 5, 2019. (Doc. No. 181.) Roadrunner filed a reply on March 26, 2019. (Doc. No. 197.)⁴

LEGAL STANDARD

Summary judgment is appropriate when the moving party "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).

In summary judgment practice, the moving party "initially bears the burden of proving the absence of a genuine issue of material fact." In re Oracle Corp. Sec. Litig., 627 F.3d 376, 387 (9th Cir. 2010) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). The moving party may accomplish this by "citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials," or by showing that such materials "do not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact." Fed. R. Civ. P. 56(c)(1)(A), (B). When the non-moving p...