Gladstone Technology, Partners, LLC v. Dahl
Gladstone Technology, Partners, LLC v. Dahl
Opinion of the Court
MEMORANDUM OPINION
Plaintiff Owen Dahl brings this diversity action against Defendants Gladstone Technology Partners, LLC; Gladstone Associates, LLC; Daniel Kreuter, Chairman of Gladstone Technology and Gladstone Associates; and Paul Lally, Chief Executive Officer of Gladstone Technology and President of Gladstone Associates.
I. FACTUAL ALLEGATIONS
On or around November 1, 2012, Plaintiff Owen Dahl, a Washington state resident, contracted with Defendant Gladstone Technology, LLC (d/b/a Gladstone Analyt-ics), a Pennsylvania limited liability company in the business of developing computer software to be used in the financial services industry. Under the terms of the parties’ service agreement, Dahl, a valuation expert, was to oversee the development and commercial release of a product called Gladstone Evaluation Index Software. In exchange, Gladstone Technology Partners promised him a 30% share of ownership in Gladstone.
The service agreement includes a choice of law and a choice of venue provision. The
Dahl contends that Gladstone never issued the 30% share of stock as promised in the agreement and paid him “no salary” for his work between November 2012 and September 2014.
On May 28, 2015, Defendant Kreuter, in his capacity as Chairman of Gladstone Technology, LLC, notified Dahl by letter (The Termination Letter) that his employment with Gladstone was being “terminated for cause.”
On June 10, 2015, Dahl filed suit against Gladstone in the U.S. District Court for the Western District of Washington. On June 23, 2015, Gladstone Technology filed its own suit against Dahl in the Eastern District of Pennsylvania asserting claims for, inter alia, breach of contract, breach of fiduciary duty, and unfair competition. Gladstone also filed a motion in Washington federal court to transfer Dahl’s lawsuit to the U.S. District Court for the Eastern District of-Pennsylvania, which was granted without opposition. When Dahl’s case was transferred to this District, it was consolidated, by stipulation, with Gladstone’s case.
II. LEGAL STANDARD
Pursuant to Federal Rule of Civil Procedure 12(b)(6), dismissal of a complaint for failure to state a claim upon which relief can be granted is appropriate where a plaintiffs “plain statement” lacks enough substance to show that he is entitled to relief.
III. DISCUSSION
A. Count I: Violations of RCW §§ 49.48 and 49.52
Dahl’s first cause of action arises under Washington state’s wage law, Revised Code of Washington (RCW) §§ 49.48 .010 and 49.52.050. RCW § 49.48.010 prohibits an employer from withholding or diverting any portion of an employee’s wage.
Under Rule 8, courts have resolved that a sufficiently plead complaint need not articulate “specific facts.”
Here, Dahl alleges that Defendants Gladstone Technology, Gladstone Associates, Daniel Kreuter, and Paul Lally (“the Gladstone Defendants”) collectively withheld or diverted a portion of his wages. He also alleges that the Gladstone Defendants acted willfully and with intent to deprive him of his wages by paying him a “lower wage” than they were obligated to under the service agreement. Accordingly, all four Gladstone Defendants were provided “fair notice” of Dahl’s wage claim under Washington law.
Dahl, however, does not allege that Defendants Lally and Kreuter, who are alleged to be partners in Gladstone, assumed personal liability for Gladstone.
B. Count II: Violation of 43; P.S. § 260.3
Dahl’s second cause of action asserts a violation of Pennsylvania’s Wage Payment and Collection Law, 43 P.S. § 260.3. That law provides that:
Every employer shall pay all wages, other than fringe benefits and wage supplements, due to his employees on regular paydays designated in advance by the employer.26
' For the WPCL to apply, an employer-employee relationship is required.
The Superior Court of Pennsylvania is clear that the existence of an employer-employee relationship under the WPCL centers on whether the employer not only controls the result of the work but directs the manner in which the. work is accomplished.
Given the existence of an employer-employee relationship, the employee must also be paid a “wage.”
*440 [A]ll earnings of an employe[e], regardless of whether determined on time, task, piece, commission or other method of calculation.32
The Superior Court of Pennsylvania considers compensation a “wage” for purposes of the WPCL when it is “offered to plaintiffs as employees, and not for some reason entirely unrelated to their employment.”
In this ease, both the employer-employee relationship and the wage requirement are sufficiently alleged for purposes of the motion to dismiss. First, the service agreement includes language that could support a finding that Gladstone controlled the manner in which Dahl accomplished his tasks. For example, the portion of the agreement detailing Dahl’s duties is entitled “discharge of duties as directed and approved by managing member.”
The wage requirement is also met. Section 6.1 of the service agreement states:
As compensation for the services rendered by Dahl hereunder, Dahl shall receive limited member units in Company (the “Units”) equaling approximately (30%) percent of all of the outstanding Units in the Company.37
Hence, the service agreement explicitly states that Dahl’s earnings were to be received in exchange for the services he was to provide pursuant to the agreement. Dahl has alleged that he performed those duties, which are listed in Schedule A of the agreement. This sufficiently supports his claim that he was paid a wage as that term is defined under the statute.
C. Count III: Breach of Contract against Gladstone Technology
Dahl’s third claim is for breach of contract. Under Pennsylvania law, a claim for breach of a contract requires three elements: 1) the existence of a contract, including its material terms; 2) breach of a duty imposed by the contract; and 3) resultant damages.
Dahl has sufficiently pled all the elements of a breach of contract claim. Specifically, he alleges that he had a service agreement with Gladstone and that Gladstone breached that agreement by failing to issue stock representing a 30% share and by failing to issue the lesser amount it did issue in a timely fashion. Additionally, he alleges that he suffered
D. Count IV: Wrongful Termination in Violation of Washington Public Poli-SL
The fourth cause of action asserts a violation of Washington public policy arising from Dahl’s termination.
Dahl alleges that he was terminated for his complaints about Gladstone’s failure to issue him a 30% share in Gladstone Technology. According to Dahl, this termination, predicated by his complaints to Defendants Lally and Kreuter, constitutes a violation of Washington public policy. Nevertheless, Dahl’s pleading does not clarify that policy. Nor does he allege that the public policy-linked conduct caused his termination. Accordingly, at least two of the elements necessary to sustain a claim for violation of public policy, the clarity and causation elements, are not met. The claim will be dismissed, and leave is granted to file an amended complaint on this count.
E. CountV: Conversion
Next, Dahl asserts a claim for conversion. “Conversion is the deprivation of another’s right of property in, or use or possession of, a chattel without the owner’s consent and without lawful justification.”
Dahl alleges that Defendants Gladstone Technology, Kreuter, Lally, and Gladstone Associates interfered with his possession of stock when they informed him that the company was rescinding his shares. Dahl further alleges that they had no legal justification to “rescind” or take back Plaintiffs stock at any time. Accord
F. Count VII: Tortious Interference with Contract
Under Pennsylvania law, to prevail on a claim for tortious interference with existing or prospective contractual relationships, a party must prove: “1) the existence of a contractual or prospective contractual or economic relationship between the plaintiff and a third party; 2) purposeful action by the defendant, specifically intended to harm an existing relationship or intended to prevent a prospective relationship from occurring; 3) the absence of privilege or justification on the part of the defendant; 4) legal damage; and 5) for prospective contracts, a reasonable likelihood that the relationship would have occurred but for the defendant’s interference.
Dahl does not allege all necessary elements of this cause of action. Dahl states that Gladstone Associates, Daniel Kreuter, and Paul Lally intentionally interfered with the service agreement between himself and Gladstone Technology by “among other acts and omission, refusing to issue the agreed-upon shares and rescinding those shares it did issue. While Dahl alleges “absence of privilege or justification” with respect to the rescinding of shares under his conversion claim, he does not state the same allegation for the tor-tious interference with contract claim. Moreover, he does not allege that Gladstone lacked privilege or justification for “refusing to issue the agreed on shares” or for the “other acts and commissions” he references in his Amended Complaint. Accordingly, the claim fails as a matter of pleading. The Court will, however, grant leave to replead on this count.
G. Count VIII: Shareholder Oppression
The eighth cause of action is for shareholder oppression and a petition for judicial dissolution. Pursuant to Pennsylvania’s Limited Liability Company Act of 1994, statutory recourse available for disaffected shareholders. Here, the company’s certificate of organization is relevant.
H. Count IX: Injunction for the Inspection of Books and Records
Dahl’s ninth cause of action is entitled “Injunction for the Inspection of Books and Records. Under Pennsylvania’s Limited Liability Company Act, partners in an LLC have a statutory right to inspect partnership books.
The partnership books shall be kept, subject to any agreement between the partners, at the principal place of business of the partnership, and every partner shall at all times have access to and may inspect and copy any of them.50
Here, Dahl claims that he requested access to all of Gladstone Technology’s books and records pursuant to his rights under the contract, but was denied. Nevertheless, as with the shareholder oppression claim, Dahl’s complaint and corresponding attachment do not establish that he was a Gladstone partner that would, by consequence, have a statutory right to inspect the company’s books and records. This count will be dismissed.
I. Count X: Declaratory Relief against Gladstone Technology
Dahl’s tenth cause of action is for declaratory judgment on two issues. First, he seeks a declaration that the “term of the Agreement ended on October 1, 2014 but no later than April 1, 2015.”
a) Declaration Agreement ended on October 1, 2014 but no later than April 1, 2015
The grant or denial of relief for declaratory judgment is within the sound discretion of the court.
Here, Dahl seeks a declaration that the terms of the Service Agreement ended on October 1, 2014, but no later than April 1, 2015. Even in consideration of each of Dahl’s allegations herein, he is seeking relief in the nature of findings of fact that may or may not be viable after discovery is conducted and trial is adjudicated. Such factual findings are appropriate, but left to the ultimate tribunal. Dahl’s request may well be important to proving his claims, but seeking declarative relief is not warranted. This count will be dismissed.
b) Unconscionability of the Forum Selection Clause
Forum selection clauses are entitled to great weight and are presumptively valid.
Dahl does not allege that the forum selection clause was “procured via fraud or overreaching.”
IV. CONCLUSION
For the reasons set forth herein, this Court will dismiss Dahl’s complaint as to Count IV, Wrongful Termination in violation of Washington Public Policy; Count VII, Tortious Interference with Contract; Count VIII, Shareholder Oppression; Count IX, Injunction for Inspection of Books and Records; and Count X, Declaratory Judgement. The Court will deny the motion to dismiss as to Count I, Washington state wage law (RCW §§ 49.48 and 49.52); Count II, violation of Pennsylvania’s Wage Payment and Collection Law, (43 P.S. § 260.3); Count III, Breach of Contract; and Count V, Conversion. An appropriate order follows.
. Dahl’s Amended Complaint asserts claims against Gladstone Technology, LLC; Gladstone Associates, the 70% majority shareholder of Gladstone Technology, LLC; Daniel Kreuter, the Chairman of Gladstone Technology, LLC; and Paul Lally, the Chief Executive Officer of Gladstone Technology and President of Gladstone Associates. Gladstone has filed a separate action against Dahl, and the two cases have been consolidated.
. For the purposes of the motion to dismiss, the factual allegations in the Amended Complaint are presumed to be true. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 589, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).
. The service agreement states: “As compensation for the services to be rendered by Dahl hereunder, Dahl shall receive limited member units in Company (the "Units”) equaling approximately thirty (30%) percent of all the outstanding Units in the Company.” See Ex. A to Pi’s Compl.
. Dahl attached the parties’ service agreement to his Amended Complaint. The Court can consider this document on a motion to dismiss pursuant to Guidotti v. Legal Helpers Debt Resolution, L.L.C., 716 F.3d 764, 772 (3d Cir. 2013).
. Compl. at ¶ 1.
.Gladstone disputes Dahl’s ability to assert statutory and public policy claims under Washington law. However, the Court finds that the choice of law provision applies only to issues of contract interpretation, and not to all disputes between the parties. Accordingly, Dahl's Washington claims are not precluded by the provision, and the Court need not engage in a choice of law analysis that would require it to weigh Pennsylvania’s interest in the case against Washington's interest. See De Lage Landen Fin. Servs., Inc. v. Rasa Floors, LP, No. 09-00533, 2009 WL 564627 at *11 n. 12 (E.D. Pa. 2009).
. Compl. at ¶ 1.
. Ex. B to Pi’s Compl.
. Compl. at ¶ 54.
. Case No. 15-4252, Order Doc. No. 9.
. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).
. ALA, Inc. v. CCAIR, Inc., 29 F.3d 855, 859 (3d Cir. 1994); Fay v. Muhlenberg Coll., No. 07-4516, 2008 WL 205227, at *2 (E.D. Pa. Jan. 24, 2008).
. Twombly, 550 U.S. at 555, 564, 127 S.Ct. 1955.
. Id. at 570.
. Id. at 562 (quoting Car Carriers, Inc. v. Ford Motor Co., 745 F.2d 1101, 1106 (7th Cir. 1984)) (internal quotation marks omitted).
. Id. (quoting McGregor v. Indus. Excess Landfill, Inc., 856 F.2d 39, 42-43 (6th Cir. 1988)).
. See, e.g., TriState HVAC Equip., LLP v. Big Belly Solar, Inc., 836 F.Supp.2d 274 (E.D. Pa. 2011).
. R.C.W. § 49.48.010.
. R.C.W. § 49.52.050.
. Fed R. Civ. P. 8. .
. Erickson v. Pardus, 551 U.S. 89, 93, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007).
. Twombly, 550 U.S. at 555, 127 S.Ct. 1955 (internal citation and quotation marks omitted).
. Dahl’s Amended Complaint asserts that "Defendants are and at all times relevant were, each other’s partners, joint venturers, alter egos, successors, assigns, and fraudulent transferees, and Dahl's joint employers.” See Compl. at ¶ 11.
. In re Witmer, 541 B.R. 769, 775 (Bankr. M.D. Pa. 2015).
. Id (internal citation omitted).
. 43 P.S. § 260.3.
. Urbano v. Stat. Courier Inc., 878 A.2d 58, 61 (Pa. Super. 2005).
. 43 P.S. § 260.3.
. Urbano, 878 A.2d at 62.
. Id (internal citation omitted).
. 43 P.S. § 260.3.
. 43 P.S. § 260.2.
. Braun v. Wal-Mart Stores, Inc., 24 A.3d 875, 956 (Pa. Super. 2011), aff'd, 630 Pa. 292, 106 A.3d 656 (2014) (internal citation and quotation marks omitted).
. Weldon v. Kraft, Inc., 896 F.2d 793, 801 (3d Cir. 1990).
. Case No. 15-3528, Pl's Ex. A.
. Compl. at ¶ 29.
. Case No. 15-3528, Pl's Ex. A.
. Johnson v. State Farm Life Ins. Co., 695 F.Supp.2d 201, 212 (W.D. Pa. 2010).
. CoreStates Bank, N.A. v. Cutillo, 723 A.2d 1053, 1058 (Pa. Super. 1999).
. Washington has adopted an elemental test for wrongful discharge claims based on public policy. See Gardner v. Loomis Armored, Inc., 128 Wash.2d 931, 941, 913 P.2d 377 (1996) (adopting these elements from Henry H. Perritt, Jr., Workplace Torts: Rights and Liabilities §§ 3.7, .14, .19, .21 (1991).
. Becker v. Community Health Systems Inc., 182 Wash.App. 935, 942, 332 P.3d 1085 (2014) (internal citations and quotation marks omitted).
. Francis v. Needleman, 705 A.2d 875, 878 (Pa. Super. 1997) (internal citations and quotation marks omitted).
. Giordano v. Claudio, 714 F.Supp.2d 508, 524 (E.D. Pa. 2010).
. Id. (internal citations and quotation marks omitted).
. Acumed LLC v. Advanced Surgical Serv., 561 F.3d 199, 212 (3d Cir. 2009).
. Health and Body Store, LLC, v. Justbrand Ltd., 480 Fed.Appx. 136, 143 (3d Cir. 2012).
. Id.
. Id.
. Ignelzi v. Ogg, Cordes, Murphy and Ignelzi, LLP., 78 A.3d 1111, 1113 (Pa. Super. 2013).
. 15 Pa. C.S.A. § 8332.
. Compl. at ¶ 118.
. Spivey Co. v. Travelers Ins., 407 F. Supp. 916, 917 (E.D. Pa 1976).
. Id.
. Id.
. Foster v. Chesapeake Ins. Co., Ltd., 933 F.2d 1207, 1219 (3d. Cir. 1991).
. Id.
. Compl. at ¶ 115-118.
Reference
- Full Case Name
- GLADSTONE TECHNOLOGY, PARTNERS, LLC v. Owen DAHL Owen Dahl v. Gladstone Technology Partners, LLC
- Cited By
- 5 cases
- Status
- Published