Groover v. Prisoner Transp. Servs., LLC
Groover v. Prisoner Transp. Servs., LLC
Opinion of the Court
ORDER ON MOTION FOR JUDGMENT ON THE PLEADINGS
THIS CAUSE is before the Court upon Defendant Prisoner Transportation Services, LLC's ("PTS") Motion for Judgment on the Pleadings, ECF No. [71] (the "Motion"). The Court has carefully reviewed the Motion, all opposing and supporting materials, the record in this case, the applicable law, and is otherwise fully advised. For the reasons set forth below, the Motion is denied.
*1287I. BACKGROUND
Plaintiff, Jeffrey Emil Groover ("Groover"), filed this action, individually and on behalf of all others similarly situated, against PTS, U.S. Corrections LLC ("USC"), and John Does 1-100 alleging civil rights violations pursuant to
Significantly, Groover alleges in the Amended Complaint that USC transported him in its van.
At issue now is PTS' Motion for Judgment on the Pleadings in which PTS requests the entry of final judgment in its favor. ECF No. [71]. In support of the Motion, PTS argues that it is not liable as a matter of law for the actions of USC - the entity that transported Plaintiff.
In response, Groover denies that his claim against PTS is based on vicarious liability and instead alleges that PTS is directly liable under a successor-in-interest theory of liability. ECF No. [77]. Groover supports this position by alleging that: (1)
*1288PTS assumed all of USC's assets and liabilities in the merger; (2) PTS' acquisition of USC constitutes a de facto merger; and (3) as PTS' subsidiary, USC remains a mere continuation of its predecessor business.
In its Reply, PTS refutes Groover's successor-in-interest theory of liability. ECF No. [78]. Specifically, PTS argues that neither Groover's Amended Complaint nor the exhibits he references in his pleading demonstrate that PTS acquired USC's liabilities.
While the Motion was pending, Plaintiff sought leave to file supplemental materials in further support of his Response consisting of documents that were recently produced in discovery. See ECF No. [115]. PTS did not object to supplementing the record as such documents were central to Plaintiff's claims against PTS and were undisputed. ECF No. [118] at 1. PTS further argued that such documents "corroborate and further support PTS' position that it is entitled to entry of judgment on the pleadings..."
II. LEGAL STANDARD
"After the pleadings are closed - but early enough not to delay trial - a party may move for judgment on the pleadings." Fed. R. Civ. P. 12(c). A party may move for judgment on the pleadings if there are no material facts in dispute. See Palmer & Cay, Inc. v. Marsh & McLennan Cos. ,
III. DISCUSSION
PTS seeks judgment in its favor on all claims Groover asserts in the Amended Complaint on behalf of himself and the putative class. ECF No. [71]. As explained above, the Motion challenges Plaintiff's claims as to Count I, Count II, and his request for injunctive relief. The Court will address each argument in turn.
a. Count I
With regard to Count I, PTS argues that, under Florida law, there are three ways in which a parent corporation can be held liable for the acts of its subsidiaries: "(1) an alter ego theory to 'pierce the corporate veil;' (2) vicarious liability based on general agency principles; or (3) direct liability where the parent corporation directly participated in the wrong complained of." Id. at 8. PTS argues that the Amended Complaint is devoid of such allegations, requiring the entry of judgment in its favor. Id. at 9. In response, Groover does not address or otherwise contest PTS's argument of vicariously liability. Instead, Groover argues that judgment on the pleadings should be denied because PTS is directly liable under three successor-in-interest theories of liability: (1) express or implied assumption of liabilities; (2) de facto merger; and (3) mere continuation of a predecessor business. Id. at 4. While Florida law generally does not impose liabilities of a predecessor corporation on a successor corporation, Plaintiff is correct in stating that an exception applies when "(1) the successor expressly or impliedly assumes obligations of the predecessor; (2) the transaction is a de facto merger; (3) the successor is a mere continuation of the predecessor; or (4) the transaction is a fraudulent effort to avoid the liabilities of the predecessor." Murphy v. Blackjet, Inc. , No. 13-80280-CIV-HURLEY,
i. Express or Implied Assumption of Liability
Plaintiff first contends that, through its acquisition of USC, PTS expressly or impliedly assumed its liabilities. Specifically, Plaintiff points to the documents referenced in the Amended Complaint in which PTS represented to the Surface Transportation Board that it was acquiring "all the interest" in USC, and Plaintiff argues that nothing within the documents disclaimed any obligation of USC. See ECF No. [77] at 7. While the Motion was pending, Plaintiff also supplemented the record with more than 200 pages of additional documents - documents that PTS contends further support its position that it is entitled to entry of judgment on the pleadings. See ECF Nos. [118], [121]. Both parties ask the Court to consider these documents in connection with its ruling on the Motion, but neither of them direct the Court to specific portions of such documents or otherwise explain their significance. "[J]udges 'are not like pigs, hunting for truffles buried in briefs.' " Chavez v. Sec'y Fla. Dep't of Corr. ,
Despite the parties' failure to explain the significance of the supplemental documents, the Court has endeavored to review them. Specifically, the record contains a document entitled "Contribution Agreement for Membership Interest in [PTS]." ECF No. [121-1]. Within the section entitled "Purchase of Membership Interest," the document provides that the members of USC, a limited liability company, agreed to purchase specified percentages of interest in PTS and that PTS, in turn, acquired all shares belonging to the USC members along with all tangible assets used or useful in USC's business operations. Id. at 3. The Contribution Agreement refers to the acquisition of this property as the "Contributed Property." Id. at 4. The Contribution Agreement also contains a section entitled "Representations and Warranties Regarding the Contributed Property," which provides that all representations and warranties that USC's members made in Annex A to the agreement form part of the "Contributed Property" that PTS was acquiring. Id. at 6. Included in Annex A is a section entitled "Litigation" containing a disclosure of all pending or threatened investigations, actions or proceedings against USC. Id. at 10-11. More specifically, USC's members warrant to PTS that "there is no pending...[or] threatened investigation, action, or proceeding against USC by or before any court... Except as disclosed on Schedule 1.08." Id. Schedule 1.08, in turn, makes multiple disclosures. Id. From these documents, an inference can be made that the "Litigation" disclosure is part of the "Contributed Property" that PTS acquired. As the legal standard of a motion to dismiss is similar to that of a judgment on the pleadings and the Court is, therefore, required to accept all allegations in the Amended Complaint as true and draw all inferences in Plaintiff's favor, the supplemental evidence creates an inference that PTS assumed USC's liabilities. See Winn-Dixie Stores, Inc. v. LJD & A Corp. , No. 3:13-cv-1172-J-34JRK,
ii. De Facto Merger
Under the successor-in-interest theory of liability, Groover argues that PTS' acquisition of USC constitutes a de facto merger. Id. at 8. For a de facto merger to occur "one corporation [must be] absorbed by another, but without compliance with the statutory requirements for a *1291merger."
(1) whether there is a continuation of the enterprise of the seller corporation, so that there is continuity of management, personnel, physical location, assets and general business operations; (2) whether there is a continuity of shareholders, accomplished by paying for the acquired corporation with shares of stock; (3) whether there is a dissolution of the seller corporation, and (4) whether the purchasing corporation assumes the obligations of the seller ordinarily necessary for the uninterrupted continuation of normal business operations.
Murphy ,
Here, the Court finds that, within the four corners of the Amended Complaint, the documents referenced therein, and the supplemental documents, Groover failed to state a claim under a de facto merger theory. Specifically, the Court finds that there are no allegations demonstrating that USC has been dissolved. While Groover argues that USC was effectively dissolved in the transaction and was subsumed into PTS, there are no such allegations in the Amended Complaint nor can the Court draw any such inferences from the documents referenced in the Amended Complaint. Further, based on the Court's review of the newly submitted documents, there is nothing from which the Court can infer that USC has been dissolved. To the contrary, these newly filed documents indicate that PTS formally acquired all interest in USC, making USC a wholly owned subsidiary of PTS and thus negating the existence of a de facto merger. Looking at the four corners of the Amended Complaint, the documents referenced therein, and the supplemental documents, the Court finds that Plaintiff failed to state a claim for relief on a de facto merger theory of liability against PTS.
iii. Mere Continuation
Groover's final theory of successor-in-interest liability against PTS is based on a mere continuation of a predecessor business theory. This theory applies "when the purchasing corporation is merely a continuation or reincarnation of the selling corporation" Bud Antle, Inc. v. Eastern Foods, Inc.,
Based on the four corners of the Amended Complaint, the documents referenced therein and the supplemental documents, the Court concludes that PTS had a corporate existence separate and apart from USC at the time of the acquisition and PTS is not, therefore, a mere continuation of USC. This is because the companies had completely different ownership and assets prior to the acquisition. The Decision of the Surface Transportation *1292Board referenced in the Amended Complaint states that prior to the acquisition, PTS' ownership was as follows: Alan Sielbeck (38.5%), Kent Wood (31.5%), Robert Downs (24%), and Lisa Kyle (6%). ECF No. [71-1] at 2. By comparison, prior to the acquisition, USC's ownership was as follows: Steve Jacques (50%), Ashley Jacques (25%), and Dustin Baldwin (25%).
b. Count II
As to Count II, asserting a claim on behalf of the putative class, PTS argues that because Groover is not a member of the class of pretrial detainees injured by PTS' transportation customs, Groover lacks standing to bring a class action suit. See ECF No. [71] at 11. Count II defines the putative class as follows:
All pretrial detainees and prisoners who were transported by Prisoner Transportation Services, LLC or any of its affiliates or subsidiaries, including U.S. Corrections, LLC, and forced to remain in a transport van in excess of twenty-four (24) continuous hours, subject only to brief, intermittent breaks, at any time between June through September of any year in the statutory period.
ECF No. [36] at ¶ 76. In response, Groover argues that because PTS is directly liable as USC's successor in interest, he is a member of the putative class and has standing to represent them. See ECF No. [77] at 12.
PTS' argument here is contingent upon a finding that PTS cannot be directly liable for Groover's claims in Count I. However, the Court has already determined that Plaintiff's claims against PTS in Count I remain viable. It, therefore, follows that PTS' argument as to Groover's standing in Count II fails. Given that Plaintiff has filed a Motion for Class Certification, the parties will have the opportunity to readdress Plaintiff's standing on behalf of the putative class at that time as the class definition has evolved since the filing of this Motion.
c. Injunctive Relief
Finally, PTS seeks judgment on the pleadings on Plaintiff's claims for injunctive relief, arguing that Groover lacks standing to maintain such a claim and that it is moot. ECF No. [71]. More specifically, PTS states that Groover failed to allege a likelihood that USC or PTS will transport him in the future under the same conditions alleged in the Amended Complaint.
It is well settled that "those who seek to invoke the jurisdiction of the *1293federal courts must satisfy the threshold requirement imposed by Article III of the Constitution by alleging an actual case or controversy." City of Los Angeles v. Lyons ,
While Groover is correct in stating that injunctive relief is a remedy and not a claim, he is incorrect in stating that a Court cannot grant judgment on the pleadings on a demand for injunctive relief. In support of his position, Groover cites to the dissenting opinion in City of Los Angeles v. Lyons in which Justice Marshall states it would be "anomalous to require a plaintiff to demonstrate 'standing' to seek each particular form of relief requested in the complaint when under Rule 54(c) the remedy to which a party may be entitled need not even be demanded in the complaint."
In Lyons , Adolph Lyons was pulled over by two officers for a traffic infraction.
Having resolved that issue, the Court concludes that Groover has not established standing to assert a claim for injunctive relief. Much like the respondent in Lyons , who did not establish a real and imminent threat of being illegally choked again, Groover failed to allege that he faces a real and imminent threat of experiencing similar treatment or conditions when being transported from one prison to another in the future. Although Groover's *1294Response argues that such allegations are present in the Amended Complaint, he does not cite to any such allegations and the Court sees none. As a result, the Court finds that Groover failed to demonstrate standing to seek injunctive relief against PTS.
Finally, with regard to PTS' argument that the claim for injunctive relief is moot, the Court agrees with PTS. "The mootness doctrine requires that the plaintiff's controversy remain live throughout the litigation; once the controversy ceases to exist, the court must dismiss the case for want of jurisdiction." Tucker v. Phyfer .
IV. CONCLUSION
For these reasons stated herein, Defendant Prisoner Transportation Services, LLC's Motion for Judgment on the Pleadings. ECF No. [71] , is GRANTED in part and DENIED in part consistent with this Order.
DONE AND ORDERED in Chambers at Miami, Florida this 30th day of July, 2018.
Curiously, the Amended Complaint alleges that PTS "formally acquired" USC, suggesting that there was not a de facto merger but a formal corporate acquisition by one corporation of another. ECF No. [36] at ¶ 16.
Reference
- Full Case Name
- Jeffrey Emil GROOVER v. PRISONER TRANSPORTATION SERVICES, LLC and U.S. Corrections, LLC.
- Status
- Published