Emerson Elec. Co. v. Yeo
| Decision Date | 05 February 2013 |
| Docket Number | Case No. 4:12CV1578 JAR |
| Parties | EMERSON ELECTRIC CO., Plaintiff, v. PETER RAMOS YEO, Defendant. |
| Court | U.S. District Court — Eastern District of Missouri |
This matter is before the Court on Defendant's Motions for Certification of Interlocutory Appeal Pursuant to 28 U.S.C. § 1292(B) [ECF No. 64] and To Stay Proceedings Pending Interlocutory Appeal. [ECF No. 65] The motions are fully briefed and ready for disposition.
On August 30, 2012, Plaintiff Emerson Electric Company ("Emerson") filed its Petition and Motion for Temporary Restraining Order against Defendant Ramos Yeo ("Defendant") in the Circuit Court of Saint Louis County, Missouri. Emerson alleges Defendant, a former employee of its indirect subsidiary Astec International Ltd., ROHQ ("Astec"), is competing against Emerson in violation of a non-compete clause included in a stock option agreement he signed with Emerson ("2011 Stock Option Agreement" or "Agreement"). Emerson filed suit in the Circuit Court of Saint Louis County, Missouri, based on a forum selection clause in the agreement. This matter was removed to this Court on September 4, 2012. On September 5, 2012, Defendant moved to dismiss Emerson's Verified Petition for Injunctive and Other Relief because the stock option agreement is not supported by adequate consideration for a non-compete clause under Missouri law and because the Court lacks personal jurisdiction over him. (Doc. No. 18) On September 7, 2012, this Court entered its Temporary Restraining Order. (Doc. No. 26) On September 14, 2012, with the agreement of counsel, this Court denied Defendant's motion todismiss without prejudice and ordered the matter stayed for fourteen days to allow the parties to submit a joint proposed discovery and briefing schedule for the preliminary injunction hearing. (Doc. No. 29) When the parties failed to submit a joint proposed schedule, the Court entered a discovery and briefing schedule on October 5, 2012. (Doc. No. 36) Defendant renewed his Motion to Dismiss on October 8, 2012. (Doc. No. 37) A hearing was held on December 19, 2012 and on December 28, 2012, the Court denied Defendant's motion. (Doc. No. 63)
Defendant now seeks to amend that order to certify the following questions of law for interlocutory appeal: (1) Does the 2011 Stock Option Agreement between Emerson Electric Company and Peter Ramos Yeo fail due to lack of adequate consideration under Missouri law barring Emerson from enforcing the restrictive covenants and forum selection clause contained in that Agreement; and (2) Does the District Court lack personal jurisdiction over Ramos Yeo where Ramos Yeo does not have minimum contacts with the state of Missouri and the only basis for the Court's jurisdiction is the forum selection clause contained in the 2011 Stock Option Agreement between Emerson Electric Co. and Ramos Yeo. Defendant also seeks a stay of these proceedings pending interlocutory appeal.
The general purpose of 28 U.S.C. § 1292(b) is "to provide interlocutory appeal in exceptional cases in order to avoid protracted and expensive litigation." Paschall v. Kansas City Star Co., 605 F.2d 403, 406 (8th Cir. 1979); White v. Nix, 43 F.3d 374, 376 (8th Cir.1994). The burden is on the movant "to demonstrate that the case is an exceptional one in which immediate appeal is warranted." E.E.O.C. v. Allstate Ins. Co., 2007 WL 38675, at *2 (E.D.Mo. Jan. 4, 2007) (quoting White, 43 F.3d at 376). To satisfy § 1292(b) requirements, a case must involve an issue that concerns "(1) a controlling question of law as to which there is (2) a substantial ground for difference of opinion and upon which (3) a decision will materially advance theultimate termination of the litigation." Paschall, 605 F.2d at 406. The Eighth Circuit has emphasized that "it is the policy of the courts to discourage piecemeal appeals because most often such appeals result in additional burdens on both the court and the litigants." E.E.O.C., 2007 WL 38675, at *2 (quoting White, 43 F.3d at 376). See also Control Data Corp. v. International Business Machines Corp., 421 F .2d 323, 325 (8th Cir.1970). It is within the trial court's discretion to grant or deny a motion for interlocutory appeal, and also within the discretion of the court of appeals to certify the appeal. Id. A district court's grant of interlocutory appeal must be in writing, and must state the basis for the interlocutory appeal. Federal Deposit Ins. Corp. v. First Nat. Bank of Waukesha, Wis., 604 F.Supp. 616, 620 (D.Wis.1985). Furthermore, the application for appeal "shall not stay proceedings in the district court unless the district judge or the Court of Appeals or a judge thereof shall so order." 28 U.S.C. § 1292(b).
Defendant argues the Court's December 28, 2012 Order denying his renewed motion to dismiss involves two controlling questions of law as to which there are substantial grounds for difference of opinion, and on which a decision will materially advance the ultimate termination of the litigation. The first question of law is whether the stock option agreement is supported by valid and adequate consideration. The second question of law is whether the Court has personal jurisdiction over him where he lacks minimum contacts with the state of Missouri and the only basis for jurisdiction is the forum selection clause of the agreement. (Memorandum in Support of Motion for Certification, Doc. No. 66, pp. 5-6) Emerson contends that neither question satisfies the statutory requirements of section 1292(b). (Opposition to Motion for Certification, Doc. No. 71, p. 3)
A. Controlling Question of Law
"All that must be shown in order for a question to be 'controlling' is that resolution of the issue on appeal could materially affect the outcome of the litigation in the district court." Newsome v. Young Supply Co., 873 F.Supp.2d 872, 876 (E.D.Mich. 2012) (quoting Eagan v. CSX Transportation, Inc., 294 F.Supp.2d 911, 915 (E.D.Mich.2003)). See also Klinghoffer v. S.N.C. Achille Lauro Ed Altri-Gestione Motonave Achille Lauro in Amministrazione Straordinaria, 921 F.2d 21, 24 (2d Cir. 1990) (). The question for appeal must be a question of law as opposed to a question of fact or matter for the court's discretion. See White, 43 F.3d at 377; Control Data Corp., 421 F.2d at 326.
In this case the order being appealed is a denial of Defendant's renewed motion to dismiss the complaint against him. "It is settled in this circuit that "[w]hether a complaint states a cause of action is a question of law which we review on appeal de novo." Westcott v. City of Omaha, 901 F.2d 1486, 1488 (8th Cir. 1990) (quoting Morton v. Becker, 793 F.2d 185, 187 (8th Cir.1986)). If the Court's December 28, 2012 Order is reversed on appeal, then the petition filed against Defendant would be dismissed and the action terminated. Thus, the questions presented for appeal are "controlling" in that sense. Westcott, 901 F.2d at 1488..
B. Substantial Grounds for Difference of Opinion
Substantial grounds for a difference of opinion exists when: "(1) the question is difficult, novel and either a question on which there is little precedent or one whose correct resolution is not substantially guided by previous decisions"; (2) the question is one of first impression; (3) a difference of opinion exists within the controlling circuit; or (4) the circuits are split on the question. Newsome, 873 F.Supp.2d at 876-77 (quoting City of Dearborn v. Comcast of Michigan III, Inc., 2008 WL 5084203, at *3 (E.D.Mich. 2008)). The difference of opinion must arise out of genuine doubt as to the correct legal standard. Morgan v. Ford Motor Co., 2007 WL 269806, at*3 (D.N.J. Jan. 25, 2007). Thus, a moving party's citation to a number of conflicting decisions on the same issue might constitute a sufficient basis for the finding that substantial differences of opinion exist See, White, 43 F.3d at 378 (). "A court faced with a motion for certification must analyze the strength of the arguments in opposition to the challenged ruling to decide whether the issue is truly one on which there is a substantial ground for dispute." APCC Services, Inc. v. Sprint Communications Co., L.P., 297 F.Supp.2d 90, 98 (D.D.C. 2003) (citing In re Vitamins Antitrust Litigation, 2000 WL 33142129, at *2 (D.D.C. Nov. 22, 2000)).
In support of his opposition to the Court's Order, Defendant argues the Order conflicts with Missouri law regarding illusory promises, see Frye v. Speedway Chevrolet Cadillac, 321 S.W.3d 429, 442 (Mo.Ct.App. 2010) and Fenberg v. Goggin, 800 S.W.2d 132 (Mo.Ct.App. 1990), and overlooks the Fifth Circuit's decision in Olander v. Compass Bank, 363 F.3d 560 (5th Cir. 2004). In Olander, the court held that a non-compete agreement contained in a stock option agreement was unenforceable because the employer's promises were illusory. Id. at 565. Given the fact that at any time before Defendant's options vested on October 3, 2012, Emerson could have terminated his employment, Defendant argues the stock option grant was an illusory promise. (Memorandum in Support of Motion for Certification, Doc. No. 66, p. 8)
Defendant also argues the Court's Order conflicts with Missouri law regarding the adequacy of consideration necessary to support a non-compete agreement, and cites Sturgis Equip. Co. v. Falcon Indus. Sales Co., 930 S.W.2d 14 (Mo.Ct.App. 1996) (...
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