Olson v. PowerBlock, Inc.

• Decision Date: 23 May 2022
• Docket Number: 21-cv-2713 (ECT/BRT)
• Parties: Gregory S. Olson, Plaintiff, v. PowerBlock, Inc., and PowerBlock Holdings, Inc., Defendants.
• Court: U.S. District Court — District of Minnesota

Gregory S. Olson, Plaintiff, v. PowerBlock, Inc., and PowerBlock Holdings, Inc., Defendants.

No. 21-cv-2713 (ECT/BRT)

United States District Court, D. Minnesota

May 23, 2022

Paul J. Robbennolt, Erin O. Dungan, and Devan V. Padmanabhan Padmanabhan & Dawson PLLC, Minneapolis, MN, for Plaintiff Gregory S. Olson.

Elisabeth Muirhead and Thomas J. Leach, III, Merchant &amp Gould, Minneapolis, MN, for Defendants PowerBlock, Inc., and PowerBlock Holdings, Inc.

OPINION AND ORDER

ERIC C. TOSTRUD, UNITED STATES DISTRICT COURT

Plaintiff Gregory Olson alleges in this case that Defendants monopolized or attempted to monopolize the market for “pin-selectable adjustable dumbbells” in violation of the Sherman Act, 15 U.S.C. § 2, when they sued him in a separate sham Minnesota state-court case. Olson and Defendants have filed competing motions. Olson seeks to preliminarily enjoin Defendants' prosecution of the state-court case. Defendants, on the other hand, seek dismissal of this suit under Federal Rule of Civil Procedure 12(b)(6) or, alternatively, a stay of this case pending resolution of the Minnesota state-court case. Defendants' motion to dismiss will be granted because Olson has failed to allege facts in his Amended Complaint plausibly showing that the state-court case is objectively baseless, an element made essential to his Sherman Act claim by the Noerr-Pennington doctrine.

Defendants-who will be referred to collectively as “PowerBlock”-design and sell weightlifting and fitness equipment, including adjustable dumbbells. Am. Compl. [ECF No. 23] ¶ 2. Olson was a co-founder and co-owner of PowerBlock and served as its Vice-President for 20 years until he left the company in 2013 due to interpersonal conflicts with other company managers. Id. ¶¶ 2, 16, 18.

On October 1, 2015, PowerBlock and Olson entered into a “Stock Redemption Agreement, ” under which PowerBlock purchased and redeemed all of Olson's PowerBlock shares. Id. ¶¶ 3, 19-20; Agreement [ECF No. 32-2] at 1, 3. The Stock Redemption Agreement includes two provisions central to this case. The first is a non-compete covenant providing as follows:

7.^[1] Gregory S. Olson agrees that he will not, for a period of six years from the date of this Agreement compete with Purchasers, directly or indirectly, as an owner, shareholder, director, officer, partner or employee of any business engaged in the business of manufacturing or distributing strength training, similar to that being manufactured or distributed by Purchasers. This noncompetition agreement shall not extend to Seller engaging in or producing or selling: 1) Olympic- type barbells and associated Components (collars, weight plates, etc.) or 2) Design, manufacturing and sales of plyometric boxes.

The parties acknowledge that this covenant forms an integral and important consideration for PBI agreeing to redeem the stock of the Seller. In addition to any other remedies available to it, in the event of violation of this covenant by the Seller, PBI may apply to a Minnesota Court of competent jurisdiction for injunctive relief to enforce this covenant.

Am. Compl. ¶ 21; Agreement ¶ 7.1 (emphasis added). The second provision required Olson to share new “strength training ideas” with PowerBlock and gave PowerBlock a right of first refusal to develop any shared idea. This provision reads as follows:

7.2 So long as any Purchaser is indebted to the Seller hereunder, Seller will give all strength training ideas to Purchasers in writing with a right of first refusal for a 90-day timeframe. Purchasers can then determine whether or not they will want to proceed with any such idea or project. Should such notice be given, Purchasers shall, within a further ninety days, deliver to Seller details of Purchasers' plan to develop and produce the relevant products, including a timetable for manufacture of the products. However, if Purchasers do not commit in writing to begin development of the idea or project, then Seller can proceed to further develop the idea or projects as the case may be. With regard to the barbell business that Seller now is involved with, Seller agrees that during the term of the Covenant Not to Compete that he will not consent to or facilitate the assignment or sale of said business to any third party, but instead shall use his best efforts to offer it to Purchasers on the same terms and conditions as offered to any third-party purchaser.

Am. Compl. ¶ 22; Agreement ¶ 7.2 (emphasis added). In addition to the stock redemption/purchase, PowerBlock agreed to employ Olson as a consultant and to pay him a $30, 000 annual salary during the non-compete covenant's term. Am. Compl. ¶ 23; Agreement ¶ 7.3.

The relevant litigation-provoking facts arise from a series of emails exchanged by the Parties beginning March 1, 2021.^[2] That day, Olson emailed PowerBlock co-founder Carl Towley and Chief Executive Officer Mattson Towley with a strength-training idea. Olson wrote: “I have a fitness product idea for a new product line and am wondering who at PowerBlock I would talk to this about? I am trying to be upfront and see if PB has interest in pursuing this under the terms of my non compete.” Am. Compl. ¶ 24; ECF No. 40-2 at 3. Mattson responded the same day, writing: “Thanks for reaching out, I'm the guy to talk to. Is there a drawing or something you could share to advance the conversation?” Am. Compl. ¶ 24; ECF No. 40-2 at 2. Olson replied: “I would prefer to show you the concept/sketches without sending drawings on the internet. Is their [sic] a time we can meet or Skype/Voom [sic], etc. I am around this week, but out the next 2 weeks.” Id. Mattson and Olson agreed to meet in person on Friday, March 5. Am. Compl. ¶ 24; see ECF No. 39-1 at 3-4.

Early the next morning (March 2), Olson emailed a “sketch of the product concept” to Mattson. In an accompanying email, Olson explained: “It is pretty simple and has a wide range of options and sizings. Please let me know if this is of interest and we can discuss possible next steps.” Am. Compl. ¶ 25; ECF No. 39-1 at 2-3. Olson's email did not include a description of, and his sketch did not depict, the “range of options and sizings” to which Olson referred.

On March 3, 2021, Olson emailed Mattson: “I am just following up on this email and also to see if you still want to try and meet this Friday in Owatonna? I am going to be out of the state for 2 weeks starting this weekend.” ECF No. 40-4 at 4. Later that day, Mattson responded:

Thanks for following up. We're moving this week to the new Burnsville location so it would be great push [sic] the meeting out until you get back. Lets [sic] meet a couple days after you get back.

Regarding the design, thank you for sharing what's on your mind, I have a few thoughts percolating so it will be a good chance to digest once we're done moving.

Am. Compl. ¶ 27; ECF No. 40-4 at 3.

More than 90 days passed before Olson and Mattson communicated again. On June 11, 2021, Mattson emailed Olson:

I was waiting for you to reach out on your return but assume you got busy. I've been hearing through the grape vine that you have a new Adjustable Dumbbell, however I'm told it's not the one you shared with me. Is there a chance I could see this prototype when we meet?

Am. Compl. ¶ 29; ECF No. 40-4 at 3; see also ECF No. 39 ¶ 13. On June 14, 2021, Olson responded:

The idea I shared with you is the same concept. Nothing has changed and the patent covers may versions, sizes and shapes. We are going to continue to develop this concept on our own. The 90 day window in my agreement has since past and we assumed no one had interest based on any lack of response or reply.

Am. Compl. ¶ 29; ECF No. 40-4 at 2-3. That evening, Mattson replied to Olson:

From what I've been told it's different from what you shared with me, if you could share the differences or similarities we could resolve this quickly. If it's what you originally shared it's derivative of something Carl developed in the past, he's finding the prototype from the barn next week. And if that's the case I don't have any interest and you're good to carry on. The variants are not necessarily part of the initial concept you presented to me which I would be interested to follow up with proof.

Am. Compl. ¶ 30; ECF No. 40-4 at 2 (emphasis added).

To summarize, by this point these email exchanges show that Olson and PowerBlock held different views regarding Olson's compliance with § 7.2's idea-sharing requirement. Olson seems to have believed that his March 2 disclosure of the sketch satisfied his idea-sharing obligation and that other “variants” of the design were not materially different (meaning Olson thought his March 2 sketch disclosure effectively disclosed all related concepts of the design). Olson also evidently believed that the passage of more than 90 days since PowerBlock received his March 2 email and first sketch meant that PowerBlock had waived or forfeited its right to develop and produce the product. PowerBlock saw things differently. It pretty clearly believed that Olson had a design or designs that were “not the one” Olson had shared in his March 1 email, ECF No. 40-4 at 3, that § 7.2 obligated Olson to share the other design variations with PowerBlock, and that until he did, PowerBlock's 90-day window to “commit in writing to begin development of the idea or project” would not begin to run.

On June 15, 2021, Olson emailed Mattson, sharing images of “other variations” of the design first shared on March 2, and persisting with the view that PowerBlock had given up any right of first refusal to develop or produce the design or its variations. Olson wrote:

I have attached a few images of some of the other variations using other shapes of materials all covered on the same patent. The image you saw is

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