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Seibels v. Sparks

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

September 23, 2019

McGRIFF SEIBELS & WILLIAMS, INC., Plaintiff,
v.
PAUL SPARKS, DARREN SONDERMAN, DAVID McMAHAN, JOHN TANNER, and J. GREGORY McCOLLISTER, Defendants.

          MEMORANDUM OPINION AND ORDER

          ANNEMARIE CARNEY AXON UNITED STATES DISTRICT JUDGE

         Plaintiff McGriff Seibels & Williams, Inc. (“MSW”) alleges that Defendants Paul Sparks, Darren Sonderman, David McMahan, John Tanner, and J. Gregory McCollister breached the terms of their employment agreements with MSW by soliciting MSW clients and employees and using confidential information while planning to leave MSW and beginning work with an MSW competitor.

         MSW asserts claims for breach of contract, tortious interference with business relations, breach of fiduciary duty, and conspiracy to interfere with business relations. MSW seeks a declaration that Defendants’ employment agreements are valid and enforceable. MSW also asks the court to enter a preliminary injunction, enjoining Defendants from engaging in conduct that MSW contends constitutes a breach of Defendants employment agreements with MSW and tortious interference with its business relations. (Doc. 12).

         In response to MSW’s motion for a preliminary injunction, Defendants urge the court defer to abstain from exercising jurisdiction and stay this case pursuant to the first-filed rule and the Colorado River and Brillhart/Wilton abstention doctrines. (Doc. 30 at 8–14). The court issues this memorandum opinion to address Defendants’ abstention arguments.[1]

         As explained below, the court DENIES Defendants’ request to abstain. First, Defendants’ argument concerning the first-filed rule is moot because the federal forum which exercised jurisdiction over similar actions has remanded those cases to state court. Second, Defendants have not met their burden of establishing that appropriate circumstances warrant abstention under the Colorado River and Brillhart/Wilton doctrines.

         I. RELEVANT PROCEDURAL HISTORY

         On July 19, 2019, Mr. Sparks filed a verified complaint for declaratory and injunctive relief against MSW in the Superior Court of Cobbs County Georgia. (Doc. 16 at 2-16). On July 25, 2019, Mr. Sonderman filed a verified complaint for declaratory and injunctive relief against MSW in the Superior Court of Cobbs County Georgia. (Doc. 16-2 at 2-20). Both Mr. Sparks’s and Mr. Sonderman’s state court complaints ask the court to declare that the restrictive covenants contained in their MSW employment agreements are unenforceable under Georgia law. (See generally Doc. 16-1; Doc. 16-2).

         On July 26, 2019, MSW removed Mr. Sparks’s and Mr. Sonderman’s state court actions to the United States District Court for the Northern District of Georgia. (Doc. 1 in Case # 1:19-cv-3405-MHC (N.D.Ga.); Doc. 1 in Case # 1:19-cv-3406-MHC (N.D.Ga.)). Later that same day, MSW filed its original complaint in this court naming Mr. Sparks, Mr. Sonderman, Mr. Tanner, and Mr. McMahan as Defendants. (Doc. 1).

         On August 2, 2019, Mr. McCollister filed a verified complaint for declaratory judgment and injunctive relief in the Superior Court of Cobb County Georgia. (Doc. 16-3 at 2–44). On August 13, 2019, MSW filed an amended verified complaint in this action, asserting the same claims for relief but adding Mr. McCollister as a Defendant. (Doc. 11). MSW also filed a motion for a temporary restraining order and preliminary injunction. (Doc. 12). The next day, the Superior Court of Cobb County held a hearing on Mr. McCollister’s request for emergency injunctive relief, and this court held a hearing on MSW’s request for a temporary restraining order in this action. (Doc. 15; Doc. 16-5 at 2).

         On August 15, 2019, this court granted in part and denied in part MSW’s request for temporary injunctive relief. (Doc. 21). The court enjoined Mr. Sparks, Mr. Sonderman, and Mr. McCollister from soliciting MSW clients or prospective clients as identified in a list that MSW counsel provided to counsel for Defendants; soliciting MSW employees; and interfering with MSW’s business relationships. (Doc. 21 at 6).

         One day later, the Superior Court of Cobb County Georgia issued an order granting Mr. McCollister’s application for a temporary restraining order. (Doc. 22-1 at 2–18). The Georgia state court found that Mr. McCollister had demonstrated a likelihood of success on the merits of his claim because the restrictive covenants in Mr. McCollister’s employment agreement are unenforceable under Georgia law. (Doc. 22-1 at 18). The Georgia state court temporarily enjoined MSW from attempting to enforce the restrictive covenants pending a hearing on Mr. McCollister’s request for a preliminary injunction. (Doc. 22-1 at 18).

         On August 22, 2019, the Northern District of Georgia remanded Mr. Sparks’s and Mr. Sonderman’s cases to the Superior Court of Cobb County Georgia. (Doc. 17 in Case # 1:19-cv-3405-MHC (N.D.Ga.)).

         III. DISCUSSION

         Defendants advance two abstention arguments. First, Defendants contend that this action cannot proceed in this court because the first-filed rule requires that this case be dismissed, stayed, transferred, or consolidated with Mr. Sparks’s and Mr. Sonderman’s cases which had been pending in the Northern District of Georgia. Second, Defendants maintain that under the Colorado River and Brillhart/Wilton doctrines, this court should abstain from exercising its jurisdiction pending resolution of Mr. McCollister’s Georgia state court action. The court address both arguments in turn.

         1. First-Filed Rule

         Defendants ask the court to defer to the earlier filed federal cases in the Northern District of Georgia. (Doc. 30 at 6–7). “Where two actions involving overlapping issues and parties are pending in two federal courts, there is a strong presumption across the federal circuits that favors the forum of the first-filed suit under the first-filed rule.” Manuel v. Convergys Corp., 430 F.3d 1132, 1135 (11th Cir. 2005). “The first-filed rule not only determines which court may decide the merits of substantially similar cases, but also generally establishes which court may decide whether the second filed suit must be dismissed, stayed, or transferred and consolidated.” Collegiate Licensing Co. v. Am. Cas. Co. of Reading, Pa., 713 F.3d 71, 78 (11th Cir. 2013); see also Mann Mfg., Inc. v. Hortex, Inc., 439 F.2d 403, 408 (5th Cir. 1971)[2] (“Once the likelihood of substantial overlap between the two suits ha[s] been demonstrated, it [i]s no longer up to the [second-filed] court [] to resolve the question of whether both should be allowed to proceed.”). Therefore, had the court ...


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