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Stradtman v. Republic Services, Inc.

United States District Court, E.D. Virginia, Alexandria Division

June 11, 2015

REPUBLIC SERVICES, INC., et al., Defendants.


JAMES C. CACHERIS, District Judge.

Plaintiff Stephen M. Stradtman ("Stradtman") filed suit against Defendants Republic Services, Inc., Republic Services of Virginia, LLC, and Ronald Krall (collectively "Defendants") originally alleging three counts under Virginia law: (1) tortious interference with contractual relations; (2) conspiracy; and (3) negligent retention of employees. (Compl. [Dkt. 1-3] ¶¶ 121-170.) Stradtman requests millions of dollars in compensatory and punitive damages. (Id. at 32.) The Court previously granted in part Defendants' motion to dismiss, and dismissed counts two and three of the Complaint, leaving only one claim for tortious interference with contractual relations ("tortious interference"). (Nov. 25, 2014 Mem. Op. [Dkt. 14]; Order [Dkt. 15].) The matter is currently set for a jury trial to commence on July 6, 2015.

Stradtman claims that Defendants tortiously interfered with contractual rights regarding his former employment as the Chief Executive Officer ("CEO") of Otto Industries North America, Inc. ("Otto"), a trash and recycling cart manufacturer. (Compl. ¶¶ 121-140.) Stradtman alleges that Defendants diverted their business away from Otto in an attempt to force his resignation. (Id.) Stradtman claims this was done in retaliation for a discrimination lawsuit that Stradtman's wife had filed against Defendants. (Id.) Stradtman believes he had no choice but to resign because of Defendants' improper methods and interference with his employment at Otto. (Id.)

This matter is now before the Court on Defendants' Motion for Summary Judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. (Defs.' Mot. for Summ. J. [Dkt. 142]; Defs.' Mem. in Supp. of Mot. for Summ. J. [Dkt. 143].) Stradtman filed a brief in opposition (Pl.'s Opp'n [Dkt. 164]), to which Defendants replied (Defs.' Reply [Dkt. 170].) On June 4, 2015, the Court heard oral argument of counsel and granted Defendants' motion in open court, which is memorialized herein.

I. Background

The following facts are taken from the parties' Local Rule 56(B) statements and are undisputed[1] unless otherwise indicated. (See Defs.' Stmt. of Facts ("SOF") [Dkt. 143] at 3-15; Pl.'s SOF [Dkt. 164] at 3-13.)

Republic Services, Inc. ("Republic") provides nationwide waste and recycling services through its subsidiaries and affiliates, including Republic Services of Virginia, LLC ("Republic-Virginia"). (SOF ¶ 1.) Otto[2] manufactures trash and recycling carts, and contracts with municipalities and waste removal companies, including Republic, for other goods and services. (SOF ¶ 2.) In 2005, Stradtman became CEO of Otto and served as a director on the four-person board of directors. (SOF ¶ 7.) Stradtman was an at-will employee. (SOF ¶ 8.)

Since at least 2008, Republic has been purchasing carts from Otto. (SOF ¶ 4.) In 2010, Republic entered into an "Amended and Restated Master Supplier Agreement" with Otto, which extended their prior agreement for an additional five years, or until December 31, 2015. (SOF ¶ 5.) This agreement could be extended one additional year if, as of December 31, 2015, Republic had not averaged at least 70% of the average purchases for the 3-year period prior to execution of the agreement. (SOF ¶ 6.)

On May 17, 2011, Stradtman posted his resume on the website of Korn Ferry, an executive recruiting firm, even though he was not actively looking for a new job. (Defs.' SOF ¶ 16 (citing Stradtman Dep. [Dkt. 143-1, 143-2] at 346); Pl.'s SOF ¶ 16 (citing Stradtman Dep. [Dkt. 164-3] at 347-48).) In June of 2011, Stradtman became engaged to marry Jennifer Taylor ("Taylor"), the then-East Region Director of Municipal Sales for Republic-Virginia. (SOF ¶ 11.) On September 9, 2011, Taylor filed an EEOC charge against Republic alleging sexual harassment, hostile work environment, gender discrimination, and after her employment with Republic-Virginia was terminated, retaliation. (SOF ¶ 12.) On October 22, 2011, Stradtman and Taylor were married. (SOF ¶ 13.) On October 27, 2011, Taylor filed a discrimination lawsuit against Defendants.[3] (SOF ¶ 14.) In December of 2011, Stradtman asked the CEO of Otto Group and fellow Otto board member, Luc Muller ("Muller"), to extend his employment into 2012 and did not raise any concerns about Republic or mention that he was seeking out other job opportunities. (SOF ¶¶ 17-18 (citing Muller Decl. [Dkt. 143-4] ¶ 7; Stradtman Decl. [Dkt. 164-1] ¶ 16).)

In early January of 2012, Stradtman was contacted by an executive recruiter from Charles Aris, Inc. regarding an opening for a CEO position at Precision Southeast, Inc. ("PSI") in Myrtle Beach, South Carolina, a company that is owned by the private equity firm Gladstone Companies ("Gladstone"). (SOF ¶¶ 19-20.) When asked why he wanted to leave his position as CEO of Otto, Stradtman responded that he was concerned about the direction of Otto, frustrated with the inability of Otto to structure an equity plan for him, and that he disagreed with Mr. Otto's compensation, which in his opinion, was at odds with growing the company. (Defs.' SOF ¶ 25 (citing Stradtman Dep. at 79-84; Charles Aris Candidate Profile [Dkt. 143-9] at 10); Pl.'s SOF ¶ 25 (citing Stradtman Dep. at 348-49; Stradtman Decl. ¶ 34; Williams Dep. [Dkt. 164-4] at 10-11, 23-24).) One day later, Stradtman updated, or re-uploaded, his resume with Korn Ferry. (Defs.' SOF ¶ 23; Pl.'s SOF ¶ 23.)

On January 16, 2012, Stradtman provided the Charles Aris recruiters with a six-page memorandum entitled "Otto Turnaround" that described his accomplishments at Otto. (Defs.' SOF ¶¶ 30, 32 (citing Otto Turnaround Mem. [Dkt. 143-12]); Pl.'s SOF ¶¶ 30, 32 (citing Stradtman Dep. at 38, 48-49).) It is disputed whether the information Stradtman provided contained confidential business information. (Id.) On January 24, 2012, Stradtman provided the recruiters with a list of references. (SOF ¶ 33.) Shortly thereafter, Stradtman interviewed with Christopher Lee, the Managing Director of Gladstone, who reported that Stradtman wanted to leave Otto because "he's been frustrated with, at Otto, feels like he's done a ton of work, built a lot of value, and he's not being given the equity piece and that upside that he was promised" and that he was "[l]ooking for an opportunity to grow a business, looking to recreate some of the success he had in his former company." (Defs.' SOF ¶¶ 34-36 (citing Lee Dep. [Dkt. 143-14] at 24:12-17); Pl.'s SOF ¶¶ 34-36 (citing Lee Dep. [Dkt. 164-5] at 14-15).)

On March 7, 2012, PSI offered Stradtman the CEO position at PSI for a lower base salary than his base salary at Otto, [4] but also included an offer of equity in the company. (SOF ¶ 37 (citing PSI Offer Letter [Dkt. 143-15]).) Four days later, on March 11, 2012, Muller agreed to pay Stradtman $270, 000, which can either be described as a bonus that would compensate Stradtman for Otto's performance from 2008 to 2010, or a payment in lieu of equity for the years 2008 and 2011. (Defs.' SOF ¶ 38 (citing Muller Decl. ¶ 8); Pl.'s SOF ¶ 38 (citing Stradtman Dep. at 392).) During the negotiation of this payment, Stradtman did not tell Muller that he was considering leaving Otto, that he had interviewed with PSI, that he received the job offer to become CEO of PSI, or that there were any problems with Republic retaliating for Taylor's lawsuit. (SOF ¶ 39 (citing Muller Decl. ¶¶ 9-10).) In his March 2012 end of quarter report to Otto, Stradtman reported that sales to Republic were up approximately 14% from the same period the previous year and did not mention any order cancellations or redirections by Republic; instead, any concerns were attributed to non-Republic matters. (Defs.' SOF ¶ 40 (citing March 2012 Report [Dkt. 143-17]); Pl.'s SOF ¶ 40 (citing Stradtman Decl. ¶ 6).)

On March 19, 2012, Stradtman continued the hiring process with PSI by interviewing with ghSmart, a personnel consultant. (SOF ¶ 41.) Stradtman again raised concerns about Mr. Otto's investment in the company and that he was frustrated with his lack of equity in Otto. (Defs.' SOF ¶¶ 42-43 (citing Stradtman Dep. at 85-88, 96-97, 98, 101); Pl.'s SOF ¶¶ 42-43 (citing Stradtman Dep. at 348-49).) On March 22, 2012, Stradtman sent an e-mail to Ms. Brown, the attorney representing Taylor in the discrimination suit against Republic, who also now represents him in this matter. (SOF ¶ 45 (citing E-mail to Ms. Brown [Dkt. 143-18]).) In the e-mail, Stradtman referenced his prior compensation from Otto, his job offer with PSI, and his expectation of receiving the $270, 000 payment from Otto in March, April, and May of 2012. (Id.) Stradtman also wrote that he "will need to try to force [his] termination [from Otto] between March 28 and April 1, roughly, in order to try to receive severance to support me with my new lower salary." (SOF ¶ 46.) Stradtman disputes any implication that he wanted to be terminated, and instead claims that by labeling his separation a "termination, " he would be allowed to collect severance to account for the 50% pay cut he would take in his new job at PSI. (Pl.'s SOF ¶ 46.)

On April 10, 2012, Stradtman accepted the CEO position with PSI by signing a written offer letter. (SOF ¶ 47 (citing Executed Offer Letter [Dkt. 143-20).) Two days later, Stradtman scheduled a conference call with Muller to discuss "a situation which has arisen and which I am very upset about, but which must be dealt with professionally and quickly." (SOF ¶ 48 (citing E-mail to Muller [Dkt. 143-21]).) During this communication, Stradtman raised issues regarding cancelled or redirected orders by Republic in the East Region for the very first time. (SOF ¶¶ 49-50 (citing E-mail to Muller at 390-93).) Stradtman stated that he was "willing to move on in the best interest of Otto's success." (SOF ¶ 50 (citing E-mail to Muller at 393).)

Initially, Muller expressed his desire for Stradtman to remain at Otto and not resign. (Pl.'s SOF ¶ 53.) Muller talked to Stradtman on April 11, 2012 and "assured him that the Company did not want him to resign, and that we were very happy with his performance and wanted him to continue to lead the Company." (SOF ¶ 51 (citing Muller Decl. ¶ 14).) Muller told Stradtman that "in the context of our overall and long term relationship with Republic Services, the issues he was raising were not that significant, and certainly did not require him to resign." (SOF ¶ 53 (citing Muller Decl. ¶ 14).) During this initial conversation, Stradtman did not tell Muller that he was looking for other employment, that he had interviewed for another job, or that he had accepted a job offer from PSI. (SOF ¶ 54 (citing Muller ...

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