Robert Half Intern., Inc. v. Van Steenis, Civ. A. No. 91-CV-71957-DT.

• Decision Date: 12 December 1991
• Docket Number: Civ. A. No. 91-CV-71957-DT.
• Citation: 784 F. Supp. 1263
• Parties: ROBERT HALF INTERNATIONAL, INC., Plaintiff, v. William C. VAN STEENIS, Defendant.
• Court: U.S. District Court — Western District of Michigan

784 F. Supp. 1263

ROBERT HALF INTERNATIONAL, INC., Plaintiff, v. William C. VAN STEENIS, Defendant.

Civ. A. No. 91-CV-71957-DT.

United States District Court, E.D. Michigan, S.D.

December 12, 1991.

Dennis Bonucchi, Detroit, Mich., for plaintiff.

David W. Zoll, Toledo, Ohio, for defendant.

SECOND AMENDED FINAL OPINION AND ORDER GRANTING PERMANENT INJUNCTIVE RELIEF

ROSEN, District Judge.

The Plaintiff, Robert Half International, Inc., filed this case on April 29, 1991 seeking to enjoin its former employee, Defendant William Van Steenis, from violating the terms of a restrictive covenant and noncompetition clause in his employment contract with the Plaintiff. The Court initially scheduled this matter for hearing on the Plaintiff's motion for preliminary injunctive relief on Friday, May 10, 1991. At that hearing, the Plaintiff stated, through counsel, that it would seek only injunctive relief against Van Steenis. Consequently, with the consent of counsel for both parties, the Court ordered the trial of this case on the merits consolidated with the evidentiary hearing on the Plaintiff's motion for a preliminary injunction, pursuant to Fed. R.Civ.P. 65(a)(2).

The bench trial commenced on Monday, May 13, 1991 and concluded on Wednesday, May 15, 1991. Following the trial, Defendant, on June 3, 1991, brought a Motion to Dismiss for Lack of Subject Matter Jurisdiction alleging that Plaintiff's case did not meet the requisite $50,000 amount in controversy requirement for diversity jurisdiction under 28 U.S.C. § 1332. This was the first time the Defendant raised this issue. Plaintiff filed a response to this motion on June 17, 1991.

This Final Opinion and Order addresses Defendant's Motion to Dismiss for Lack of Subject Matter Jurisdiction and constitutes the Court's findings of fact and conclusions of law resulting from the trial.

DEFENDANT'S MOTION TO DISMISS

As a preliminary matter, this Court will address Van Steenis' Motion to Dismiss. A challenge to subject-matter jurisdiction may be made at any time, even after a trial on the merits. Fed.R.Civ.P. 12(h)(3). The burden rests on the party seeking federal jurisdiction to show that it is properly in federal court. This showing must be supported by a preponderance of the evidence. McNutt v. General Motors Acceptance Corporation, 298 U.S. 178, 189, 56 S.Ct. 780, 785, 80 L.Ed. 1135 (1936).

Assessing actual damages in actions in equity is made difficult by the very nature of the action. Yet this has not stopped courts from determining jurisdictional amounts in such instances:

This action was brought in equity, which by its very nature presupposes the difficulty of ascertaining actual damages. The value to the plaintiff of the rights he is seeking to protect is the measure of jurisdiction in equity cases, even though the value of that right may not be capable of exact valuation in money.

Premier Industrial Corp. v. Texas Industrial Fastener Co., 450 F.2d 444, 446 (5th Cir.1971).

In the action to enforce a covenant not to compete before it, the Premier court listed three possible approaches to valuation. First, the value of the damage suit which the plaintiff dropped against the defendant in consideration for a settlement agreement. Second, the value of the plaintiff's lost revenue because of the employment of the defendant by a competitor. Third, the value of the future effect of the defendant's breach upon all contracts with other agents of the plaintiff. Id. at 447.

To dispose of this motion, this Court need only rely on the second of the three Premier tests. Thus, to defend against Defendant's Motion to Dismiss, Plaintiff need prove by a preponderance of the evidence that the value of its lost revenue because of the employment of Defendant by a competitor exceeds $50,000 exclusive of interest and costs.

In its response to Van Steenis' motion, Plaintiff refers this Court to the affidavit and trial testimony of Mr. Frederick K. Getz, Area Manager in the States of Michigan and Ohio for Robert Half International, Inc. Mr. Getz stated in his affidavit that in the almost seven month period from July 1, 1990 to January 31, 1991, Van Steenis was solely responsible for generating business for Robert Half which resulted in revenues in the amount of $135,920. These revenues represent fees paid by various customers of Robert Half. According to Mr. Getz, Van Steenis has contacted these customers in his new position as an employee of a competing firm.

Mr. Getz testified at trial that Van Steenis' total compensation was equal to 33% of total billings or $35,000, whichever was greater. Mr. Getz said that Van Steenis was paid $53,000 in 1989 and $73,000 for the period beginning January 1, 1990 and ending February 5, 1991.

Van Steenis admitted that he was paid $53,124.92 in 1989, $61,015.10 in 1990, and that he received a check for $15,000 several days before he terminated his employment on February 5, 1991. As he was paid 33% of his total billings for the year, the total client billings or revenues generated by Van Steenis in 1990 was $183,045.00.

In support of its motion, Van Steenis makes the conclusory statement that the Plaintiff has failed to present any evidence to suggest that Van Steenis' employment with his new employer results in at least $50,000 damages to the Plaintiff. Van Steenis goes on to state that, "In fact the evidence presented in this case tends to suggest to a legal certainty that the Plaintiff will not be damaged to this extent." Yet at no point in Van Steenis' two page motion does it present evidence to support this claim.

This Court finds that the Plaintiff has met its burden by showing by a preponderance of the evidence that the amount in controversy exceeds $50,000 exclusive of interest and costs. Particularly persuasive is testimony that Van Steenis generated a total of $183,045.00 in revenues for Plaintiff during 1990. It seems very likely that Van Steenis would generate a similar sum while working for the direct competitor of the Plaintiff for the year of the restrictive covenant. Had Van Steenis respected the restrictive covenant, this sum may well have been directed towards Plaintiff and not the competing concern.

PLAINTIFF'S DEMAND FOR INJUNCTIVE RELIEF

A. Findings of Fact

The Plaintiff, Robert Half International, Inc., is an employee recruitment firm concentrating in locating permanent and temporary employees in the areas of accounting and finance. Defendant William Van Steenis worked for the Plaintiff as a professional recruiter from May 18, 1988 through February 5, 1991. In this position, Van Steenis would contact various clients of the Plaintiff, corporations and other firms with openings for permanent professional employees in the areas of accounting and finance, and request that the client allow the Plaintiff to find a suitable prospective employee to fill the open position. If the Plaintiff were able to locate a suitable candidate, the Plaintiff arranged for an interview between the candidate and the client, the prospective employer. In the event the client agreed to hire one of the candidates referred by the Plaintiff, the Plaintiff would be entitled to receive an agreed-upon commission from the client/employer.

Van Steenis began to work for the Plaintiff on May 18, 1988. Prior to that time, he received an oral offer of employment from the Plaintiff's president, Fred Getz. According to Van Steenis, Getz promised him that he would receive an annual salary of $35,000 plus commissions equal to 33% of the client billings generated by Van Steenis on the Plaintiff's behalf. According to Van Steenis, Getz represented that the 33% bonus would be paid in addition to the regular $35,000 salary.

However, Getz testified that he never represented the compensation package this way. Instead, he testified that the Plaintiff's policy was always that the salary was only the minimum annual compensation paid to the recruiters. Thus, Van Steenis' total compensation would equal 33% of total billings or $35,000, whichever was greater — but not both. Getz testified that he did not misrepresent these terms to Van Steenis. These terms were confirmed as the usual arrangement by witness Kyle Luke, who is presently employed by the Plaintiff as a recruiter. Luke emphasized in his testimony, on behalf of the Plaintiff, that the bonus arrangements were "discretionary."

In any event, Van Steenis signed the Employment Agreement on May 18, 1988, the day he started work for the Plaintiff, although after he had accepted the employment offer. (The Employment Agreement was introduced into evidence as Plaintiff's Exhibit 7.) The Employment Agreement contains the following express terms regarding compensation:

6. Compensation. As compensation for his or her services to Employer, Employee shall receive a monthly salary of $2,916.67 monthly. In Employer's sole discretion, such salary may be changed from time to time, without amendment to this Agreement. Notwithstanding the foregoing, Employee agrees that any sums he or she receives as benefits from any disability policy, the premiums of which were paid by Employer, or any Worker's Compensation benefits paid shall constitute Employee's total salary for that period in which the benefits are paid, and Employer shall be relieved from paying Employee further salary for that period of disability even though the amount received is less than Employee's then monthly salary.

In the Employer's sole discretion, bonuses, deferred compensation plans, health insurance and other benefit plans may be instituted from time to time. Employee can have no expectations regarding such plans or their continuation. All of such plans may be instituted, amended, and discontinued at any time at Employer's sole discretion, without Employee's consent.

(Plaintiff's Exhibit 7, Par. 6, p. 3).

Van Steenis testified that he read the contract and signed it on May 18, 1988. He further testified that his post-secondary education in accounting...