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Inc. v. Neaves

United States District Court, W.D. Virginia, Harrisonburg Division

October 24, 2017

O'SULLIVAN FILMS, Plaintiff,
v.
DAVID NEAVES, Defendant.

          MEMORANDUM OPINION

          Michael F. Urbanski Chief United States District Judge.

         This matter comes before the court on defendant's Motion to Dismiss, ECF No. 8, in which defendant requests that the court dismiss plaintiffs Complaint for Declaratory Judgment and Injunctive Relief (the "Complaint" or "Compl."), ECF No. 1, under Federal Rules of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction and 12(b)(6) for failure to state a claim. For the reasons set forth below, the court will DENY the motion to dismiss.

         I. Background

         Plaintiff O'Sullivan Films ("O'Sullivan") is a national manufacturer of plastic film products, including artificial leather products.[1] O'Sullivan develops and manufactures artificial leather products for multiple automotive manufacturers, including current and prospective clients General Motors, Fiat Chrysler Automobiles, Ford, Tesla, and Daimler. These manufacturers use O'Sullivan's artificial leather products for the fabrication of automobile interior parts and seating.

         Defendant David Neaves ("Neaves") worked as New Product Development Chemist at O'Sullivan's Winchester, Virginia artificial leather plant from June 2013 through December 2016. Neaves played a central role in the development of O'Sullivan's artificial leather products and, in his position, received extensive proprietary training with O'Sullivan's parent company. Neaves had responsibility over O'Sullivan's artificial leather group, with a number of junior artificial leather research and development employees reporting to him. In his position, Neaves also worked closely with O'Sullivan's current and prospective clients.

         As part of his employment with O'Sullivan, Neaves signed a Confidential Information, Invention, and Non-Solicitation Agreement (the "NSA"), ECF No. 1 Ex. 1. The NSA contained a confidential information provision, in which Neaves promised he would "only use the Confidential Information[2] for the benefit of O'Sullivan, and not for [his] own or anyone else's benefit." NSA ¶ 3. Neaves agreed that when his "employment with O'Sullivan ends regardless of the reason, [he] will return in good condition all O'Sullivan property and Confidential Information." Id. ¶ 4.

         The NSA also restricted Neaves' ability to solicit certain O'Sullivan contacts. In pertinent part, Neaves agreed that:

[f]or one year after [his] employment with O'Sullivan ends, either voluntarily or for cause, [he] agree[d] that [he] will not (a) sell, attempt to sell, or assist others in selling or providing products or services in competition with the Business of O'Sullivan at the Restricted Contacts; or (b) help, financially or otherwise, any person or entity to compete with the Business of O'Sullivan by using or contacting the Restricted Contacts.

Id. ¶ 8. In turn, "Restricted Contacts" is defined as:

"actual and potential customers, agents, distributors, vendors, business partners, and persons or entities that, during the two years before [Heaves'] employment with O'Sullivan ends, [he] had direct contact with or that [he] had indirect contact with, including indirect contact by supporting or being responsible for the activities of other O'Sullivan employees who had direct contact with the Restricted Accounts."

Id. Finally, Neaves agreed that, during his employment with O'Sullivan and for two years after his employment ended, he would inform any potential future employer of the contents of the NSA. Id. ¶ 11.

         Neaves resigned on December 12, 2016, telling O'Sullivan that he had accepted a position as Director of Research and Development with Uniroyal Global Engineering, Inc. ("Uniroyal"). Uniroyal, which also develops and manufactures artificial leather products, is a direct competitor of O'Sullivan and provides products to many of O'Sullivan's current and potential clients. In conversations with O'Sullivan management as he was planning his resignation, Neaves claimed he did not know the contents of the NSA. Additionally, shortly after Neaves left O'Sullivan, a forensic examination of Neaves' company-issued laptop indicated that Neaves transferred certain proprietary O'Sullivan documents to a personal USB flash drive, which Neaves did not return upon his resignation.

         On March 30, 2017, O'Sullivan commenced this action. O'Sullivan's Complaint seeks a declaration that Neaves is violating the terms of the NSA and injunctive relief against future violations of the NSA. The court, concerned that O'Sullivan had not properly pled subject matter jurisdiction in the Complaint, issued an show cause Order why the case should not be dismissed for lack of jurisdiction. Order, ECF No. 5. O'Sullivan's Memorandum in Response to the Court's Show Cause Order, ECF No. 7, pled additional jurisdictional facts. In further support of the court's jurisdiction over its claim, O'Sullivan also included the Declaration of Richard J. Till (the "Till Declaration" or "Till Decl."), ECF No. 7 Ex. A, who is Vice President of Human Resources for O'Sullivan. The same day, Neaves moved to dismiss the Complaint for lack of subject matter jurisdiction and failure to state a claim.

         II. Jurisdiction

         Neaves first moves to dismiss the Complaint under Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction. Federal courts are courts of limited jurisdiction. See Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 552 (2005); United States ex rel. Vuyyuru v. Jadhav. 555 F.3d 337, 347 (4th Cir. 2009). A federal court's jurisdiction is confined to the cases that, within the bounds of the Constitution, Congress has allowed the court to hear. See Bowles v. Russell, 551 U.S. 205, 212 (2007). If a federal court determines it lacks subject matter jurisdiction over a complaint, "the action must be dismissed." Vuyyuru, 555 F.3d at 347. The party seeking to invoke a federal court's jurisdiction bears the burden of demonstrating that subject matter jurisdiction actually exists. Shore Bank v. Harvard. 934 F.Supp.2d 827, 832 (E.D. Va. 2013).

         A. Declaratory ...


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