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Johnson v. Experian Marketing Solutions, Inc.

United States District Court, D. Nebraska

May 27, 2015

ANDREW JOHNSON, Plaintiff,
v.
EXPERIAN MARKETING SOLUTIONS, INC., a Delaware Corporation, Defendant.

MEMORANDUM AND ORDER

JOHN M. GERRARD, District Judge.

This matter is before the Court on the plaintiff's "Motion for Temporary Restraining Order and Temporary Injunction" (filing 7), which the Court understands to be a motion for preliminary injunction pursuant to Fed.R.Civ.P. 65(a), and the defendant's Motion to Stay (filing 16). The Court will grant the motion to stay, and deny the motion for preliminary injunction without prejudice.

BACKGROUND

The plaintiff, Andrew Johnson, is a former employee of the defendant, Experian Marketing Solutions. Filing 6 at 1. Johnson resigned his position at Experian to take a job with Acxiom Corporation, a competitor of Experian. Filing 6 at 1-2. The substantive dispute underlying this case involves several noncompetition clauses that, according to Experian, prevent Johnson from working for Acxiom for a year following his resignation. Filing 6 at 2. Johnson contends that those clauses are unenforceable. Filing 6 at 4.

Johnson notified Experian of his resignation on Friday, April 10, 2015. Filing 6 at 1. Later that day, Experian sent a demand letter to Acxiom advising Acxiom of the noncompetition agreement and threatening legal action with respect to Johnson and another departing employee, Richard Erwin. Filing 6-1. The following Monday, April 13, Johnson filed a complaint for declaratory judgment against Experian in the District Court of Douglas County, Nebraska. Filing 1-1. On April 14, Experian sued Johnson and Erwin in the Circuit Court of Cook County, Illinois.[1] Filing 18-2. On the same day, Johnson moved for a temporary restraining order in Nebraska state court. Filing 1-2. But before that motion was ruled upon, on April 16, Experian filed its notice of removal to federal court. Filing 1. At some point, Experian moved in Illinois state court for a temporary restraining order, but on April 17, that motion was denied. Filing 6 at 10. On April 20, Johnson moved to dismiss the Illinois action. Filing 18-3. That motion is pending. Filing 18-5. On April 21, Johnson moved in this Court for a preliminary injunction, asking the Court to enjoin Experian from pursuing legal proceedings to enforce the noncompetition clauses. Filing 7. That motion is also pending. Finally, on May 7, Experian moved to stay this case in deference to the Illinois state court's disposition of Johnson's motion to dismiss. Filing 16.

DISCUSSION

The parties have, as directed by the Court, briefed issues relating to parallel litigation and federal court abstention, most pertinently the Court's discretion to stay or abstain from exercising jurisdiction under the Declaratory Judgment Act, 28 U.S.C. § 2201(a), when a parallel state court action involving questions of state law is pending.[2] See Wilton v. Seven Falls Co., 515 U.S. 277 (1995). A district court may exercise its discretion and determine that a declaratory judgment serves no useful purpose. Cincinnati Indem. Co. v. A & K Constr. Co., 542 F.3d 623, 625 (8th Cir. 2008).

That broad discretion, which is grounded in the language of the Declaratory Judgment Act, is guided by considerations of judicial economy, practicality, and wise judicial administration, and with attention to avoiding gratuitous interference with state proceedings. Lexington Ins. Co. v. Integrity Land Title Co., Inc., 721 F.3d 958, 967-68 (8th Cir. 2013). The Court must determine if the question in controversy would be better suited to the proceedings in the state court; this analysis includes whether the state case involves the same issues and parties as the federal declaratory case, whether all claims can be decided in the state court, and whether all parties are joined and amenable to process there. Cincinnati Indem. Co., 542 F.3d at 625. And the issues cannot be governed by federal law. Id.

Experian argues, unsurprisingly, that Wilton abstention weighs in favor of staying these proceedings. But the initial question is whether Wilton abstention standards apply at all. Johnson argues they do not. Filing 21. Johnson's argument is a melange of different contentions, many of which are off the mark. Initially, Johnson argues that Illinois is not the proper venue for this action, because the choice of law and choice of venue provisions in the noncompetition agreements are unenforceable. Filing 21 at 5-11. But the Supreme Court has never used choice of law or venue considerations as factors in analyzing an abstention under Wilton, and the Eighth Circuit has found no authority requiring the Court to consider them. Royal Indem. Co. v. Apex Oil Co., Inc., 511 F.3d 788, 797 (8th Cir. 2008). The threshold question when parallel litigation is involved is not determining the appropriate venue, but deciding which court will take the lead in determining the appropriate venue. Wilton provides the rubric for a federal court making that decision. And nothing in Johnson's argument persuades the Court that the Illinois circuit court is incapable of deciding issues relating to choice of law and venue, even if Nebraska law is implicated. See id.

Next, Johnson argues that Wilton abstention is inappropriate because his complaint is not limited to declaratory relief. Filing 21 at 11. He points out that he has asked for injunctive relief, and pled a claim for tortious interference with a business expectancy. Filing 21 at 11-12. Johnson contends that as a result, the Court cannot apply Wilton, but must apply the more restrictive Colorado River doctrine, which requires "exceptional circumstances" before the Court may decline to exercise jurisdiction. See Royal Indem. Co., 511 F.3d at 793 (citing Colo. River Water Conservation Dist. v. United States, 424 U.S. 800 (1976)). But even in a declaratory judgment action, the Court may "grant any further necessary or proper relief based on' its declaratory judgment decree." Id. (quoting 28 U.S.C. § 2202). "[C]onsequently, a court may still abstain in a case in which a party seeks damages as well as a declaratory judgment so long as the further necessary or proper relief would be based on the court's decree so that the essence of the suit remains a declaratory judgment action." Id. at 793-94. In other words, a declaratory judgment plaintiff may not convert a district court's discretionary jurisdiction under Wilton into nearly mandatory jurisdiction under Colorado River simply by tossing in dependent or boilerplate nondeclaratory requests. Riley v. Dozier Internet Law, PC, 371 F.Appx. 399, 404 n.2 (4th Cir. 2010).

So, for instance, in Horne v. Firemen's Ret. Sys. of St. Louis, the Eighth Circuit held that the plaintiff's claim was "most aptly characterized as one for declaratory judgment" despite his request for injunctive relief and pursuit of money damages. 69 F.3d 233, 236 (8th Cir. 1995). The plaintiff, who claimed that his employer's policy of mandatory retirement was unlawful, sued for "declaratory relief, an injunction to keep defendants from removing him from his job, emotional distress damages, and attorney's fees." Id. at 235. The Eighth Circuit held that Wilton abstention was nonetheless appropriate, explaining that

[t]he essential distinction between a declaratory judgment action and an action seeking other relief is that in the former no actual wrong need have been committed or loss have occurred in order to sustain the action. Although [the plaintiff] suffered a threatened harm, he has suffered no actual harm aside from unspecified emotional distress and attorney's fees. [He] continues to work, and the essence of his suit is one for declaratory judgment.

Id. at 236 (citation omitted); see also Royal Indem. Co., 511 F.3d at 794-95.

The circumstances here are comparable. The Court recognizes that in some situations, a party's "good faith" request for injunctive relief may preclude application of the Wilton standard. See Royal Indem. Co., 511 F.3d at 795 n.3 (citing Cedar Rapids Cellular Tel., L.P. v. Miller, 280 F.3d 874 (8th Cir. 2002)). But a party cannot avoid Wilton "merely by artfully pleading manufactured claims for injunctive relief." Id . Wilton would be a dead letter if it could be avoided in an otherwise-paradigmatic declaratory judgment case involving the construction of a contract, simply because the plaintiff tagged "and enjoin the defendant from enforcing the contract" onto its prayer for relief. And Johnson's tortious interference claim is similarly dependent-if the Court were to reject Johnson's claim under the Declaratory Judgment Act, Johnson could not recover on his tort claim either. The basis of the tortious ...


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