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Woods v. Judicial Correction Services, Inc

United States District Court, N.D. Alabama, Southern Division

February 19, 2019

HALI WOODS, et al., Plaintiffs,



         This case is before the court on (1) CHC Companies, LLC's (“CHC”)[1] and Correct Care Solutions, LLC's (“CCS”) Motion for Summary Judgment (Doc. # 176), and (2) CHC's and CCS's Motion to Strike Plaintiffs' Exhibits and Supplemental Briefing (Doc. # 205). Both Motions have been fully briefed. (Docs. # 194, 206, and Docs # 208, 209). The Motions are related, and the court will first address the Motion to Strike.

         I. The Motion to Strike

         CHC and CCS move the court to strike Exhibits 19 and 20 (Docs. # 195-21 and 195-22) to Plaintiffs' Response in Opposition to CHC's and CCS's Motion for Summary Judgment. (Doc. # 194). They argue that the exhibits are a transparent attempt to evade the court's page limitation for summary judgment briefs. (Doc. # 205). They also argue that neither document is properly an “exhibit” because they do not constitute evidence. (Id.).

         Plaintiffs respond that the exhibits were an attempt to simplify the presentation of issues to the court due to its expressed concern over matters of efficiency in this series of similar cases. (Doc. # 108 at 1-2). They state that they filed Exhibits 19 and 20 in exhibit form, rather than as part of their brief, because they expect to file the same exhibits in other related cases, thereby reducing the ongoing burden on the court. (Id.).

         Defendants' reply notes that Plaintiffs' opposition to the Motion to Strike (Doc. # 208) concedes those “exhibits” contain additional facts and argument. (Doc. # 209).

         The court has examined Exhibits 19 and 20 and agrees with Defendants that neither document constitutes Rule 56 evidence. Rather, the documents consist of additional briefing and argument. The court will certainly not consider them as evidence, and sees no need for them to be refiled. When the court envisioned that materials from this or other cases are to be used to promote efficiency, the court contemplated that evidence and the court's opinions and orders would be applied in multiple cases. That being said, the court is fully capable of disregarding irrelevant or improper information contained in the record on summary judgment. Accordingly, the Motion to Strike is due to be denied as moot.

         II. The Rule 56 Evidence and the Undisputed Facts

         A. The Defendants' Corporate Relationship

         CHC is a wholly owned subsidiary of Correctional Healthcare Holding Company, Inc. (Doc. # 44; Doc. # 180-45). Among other companies, CHC wholly owns Judicial Correction Services, Inc. (“JCS”) and Correctional Healthcare Companies, Inc. (Id.). CHC provides administrative and employment services for its subsidiaries. (Id.).

         CCS is a wholly owned subsidiary of CCS Intermediate Holdings, LLC, which also owns a parent company of CHC and, in turn, JCS. (Doc. # 45; Doc. # 180-45). CCS is not a parent to either CHC or JCS. (Id.).[2]

         On September 30, 2011, CHC, Judicial Merger Sub, Inc. (“Merger Sub”), JCS, and Jarrett Gorlin entered into an Agreement and Plan of Merger. (Doc. # 180-27 at 2-61). Under the Merger Agreement, CHC was designated the “Purchaser.” (Doc. # 180-27 at 9). “Merger Sub” was defined as a wholly owned subsidiary of CHC. (Id.). The “Company” was defined as JCS. (Id.).

         Pursuant to the Agreement, a “Reverse Subsidiary Merger” was consummated. (Doc. # 180-27). That is, CHC's subsidiary, Merger Sub, was merged into JCS. (Doc. # 180-27 at 10). The Agreement provides that, upon the merger, “the separate existence of Merger Sub shall cease, and the Company [JCS] shall be the surviving corporation (“the Surviving Corporation”). (Id.; see also Doc. # 180-28 at 33 (noting that under the Merger Agreement, Merger Sub and JCS merged, and JCS was the resulting surviving corporation)). The Certificate of Merger also defines the JCS as the “Surviving Corporation, ” and notes that it “will continue its existence as said surviving corporation under its present name … .” (Doc. # 180-28). The Agreement further provides that, “[f]rom and after the Effective Time [of the merger], the Surviving Corporation [JCS] shall succeed to all assets, rights, privileges, powers and franchises of, and be subject to all of the liabilities, restriction, disabilities and duties of, the Company and Merger Sub, all as provided under the Delaware Act.” (Id.).[3]

         The merger agreement required certain JCS executives to resign from JCS. (See Doc. # 180-27 at 17). It also required those executives to enter into employment agreements and non-compete agreements. (Doc. # 180-27 at 45). Under the form Employment Agreement, the former JCS executives became employed by CHC, but the agreement defined their responsibilities as to “serve the Company and its Affiliates.” (Doc. # 180-28 at 18). The “Position with the Company” section of the Agreement contains language indicating that, “for so long as JCS constitutes a wholly-owned subsidiary of the Company, Executive shall serve as the, and shall report to .” (Id.). The following ten employees were required to execute these employment agreements with CHC: Robert McMichael, Jarrett Gorlin, Dennis Sanders, Dennis Moon, Charlie Farrahar, Steve Pelts, Kevin Eagan, Ronda Cole, Beth Ivey, and Dennis Kirklin. (Doc. # 180-28 at 4). The other JCS employees were not employed by CHC. (Doc. # 180-29 at 35-36).

         The form Non-Competition and Non-Solicitation Agreement presented to the ten executives recites that the agreement is made “by and among” CHC, JCS, and the former stockholder of JCS. (Doc. # ...

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