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Rent-A-Center, Inc v. Selena Wilbur

March 11, 2011

RENT-A-CENTER, INC., PLAINTIFF,
v.
SELENA WILBUR, DEFENDANT.



The opinion of the court was delivered by: Hon. Glenn T. Suddaby, United States District Judge

MEMORANDUM-DECISION and ORDER

Currently before the Court in this breach-of-contract action, filed by Rent-A-Center, Inc. ("Plaintiff" or "RAC") against Selena Wilbur ("Defendant"), are the following four motions: (1) a motion for a preliminary injunction filed by Plaintiff (Dkt. Nos. 5-6); (2) a motion to voluntarily dismiss its Complaint without prejudice, pursuant to Fed. R. Civ. P. 41(a)(2) filed by Plaintiff (Dkt. No. 17); (3) a motion to dismiss Defendant's counterclaims, or, in the alternative, to stay this action and compel Defendant to arbitrate her counterclaims filed by Plaintiff (Dkt. No. 21); and (4) a motion to dismiss the action with prejudice based on Plaintiff's withdrawal of the action filed by Defendant (Dkt. No. 23). For the reasons set forth below, Plaintiff's second and third motions are granted; its first motion is deemed withdrawn and/or denied as moot; and Defendant's motion is denied.

I. RELEVANT BACKGROUND

A. Plaintiff's Complaint

On November 22, 2010, Plaintiff filed its Complaint. (Dkt. No. 1.) Generally, in its Complaint, Plaintiff alleges that Selena Wilbur ("Defendant") breached a Business Confidentiality Agreement (the "BCA" or the "Agreement"), which prohibited her from certain post-employment competitive activities. (Dkt. No. 1.) More specifically, Plaintiff alleges that Defendant, who had access to "confidential and valuable information concerning RAC's customers and employees, pricing and marketing, including RAC's strategy," (1) went to work for easyhome, a competitor, at easyhome's Syracuse Office, which is located within a seven-mile radius of Plaintiff's Syracuse store (where Defendant previously worked), (2) "upon information and belief," has "solicited RAC employees with whom she worked to join easyhome[,]" and (3) "upon information and belief . . . [has] contacted RAC's customers to take their business to easyhome." (Id.)

Plaintiff does not request a monetary award in its Complaint. Rather, as relief, Plaintiff "seeks a preliminary injunction to enforce the BCA and protect [its] confidential information, customer goodwill and legitimate business interests." (Dkt. No. 1 at ¶ 4.) Plaintiff alleges that, if Defendant is not enjoined from breaching the BCA, Plaintiff will suffer irreparable harm. Plaintiff further alleges that "[t]his court has subject matter jurisdiction over this matter pursuant to 28 U.S.C. § 1332 as the parties are citizens of different states and the amount in controversy exceeds $75,000." (Dkt. No. 1 at ¶ 7.)

B. Plaintiff's Motion for a Preliminary Injunction

On November 23, 2010, Plaintiff filed a motion for a preliminary injunction, which was supported by affidavits and other exhibits. (Dkt. Nos. 5, 6.) On December 17, 2010, Defendant filed an Answer and Counterclaim, alleging, among other things, that the BCA is unenforceable because (1) no consideration was provided in exchange for her signature and (2) the BCA was signed under duress. (Dkt. No. 10.) On December 21, 2010, Defendant filed a memorandum of law in opposition to Plaintiff's motion, which was supported by affidavits and other exhibits. (Dkt. No. 11.)

C. Hearing on Plaintiff's Motion for a Preliminary Injunction

On December 22, 2010, the Court held a hearing ("the Hearing") regarding Plaintiff's motion for a preliminary injunction. No witnesses testified during the hearing. However, among other things, Defendant, who was present at the Hearing, indicated, through her attorney, that (1) she has not solicited any Rent-A-Center customers,*fn1 (2) while she is unsure of where her employer derives its customer list, she has not added any prospective customers to their list, (3) her current employer advertises its business to prospective employers and rewards new customers with cash and/or discounts when they provide leads in the form of friends or family-member contacts, and (4) although she has seen certain of Plaintiff's customers enter easyhome's store, she has not dealt directly with any of them. In addition, after Plaintiff was unable to provide the Court with any financial information relevant to the Rent-A-Center store in Syracuse, the Court indicated on the record that it has "serious reservations" about whether Plaintiff's claim meets the jurisdictional minimum. At the conclusion of the Hearing, the Court afforded the parties seven days to submit further briefing on the many arguments raised during the hearing and many issues identified by the Court.

D. Plaintiff's Motions to (1) Voluntarily Dismiss Its Complaint, and (2) Dismiss Defendant's Counterclaims or Compel Defendant to Arbitrate Her Counterclaims

On December 29, 2010, Plaintiff filed a motion to voluntarily dismiss its Complaint without prejudice, pursuant to Fed. R. Civ. P. 41(a)(2). (Dkt. No. 17.) On January 7, 2011, after the deadline to submit briefing on the many arguments raised during the hearing had expired, and before Defendant submitted a response to Plaintiff's motion to dismiss, Plaintiff filed a motion to dismiss Defendant's counterclaims, or, in the alternative, to stay this action and compel Defendant to arbitrate her counterclaims. (Dkt. No. 21.) On January 11, 2011, Defendant submitted a letter-motion requesting that Plaintiff's Complaint be dismissed "based on RAC's withdrawal of the lawsuit in Federal Court." (Dkt. No. 23.) However, Defendant requested that the dismissal be "with prejudice." (Id.)

II. RELEVANT LEGAL STANDARDS

A. Legal Standard Governing Motion for Voluntary Dismissal Pursuant to Fed. R. Civ. P. 41(a)(2)

Rule 41(a)(2) of the Federal Rules of Civil Procedure provides that, except where all parties agree to a stipulation of dismissal, an action may be dismissed at the plaintiff's request only by court order, on terms that the court considers proper. If a defendant has pleaded a counterclaim before being served with the plaintiff's motion to dismiss, the action may be dismissed over the defendant's objection only if the counterclaim can remain pending for independent adjudication. Unless the order states otherwise, a dismissal under this paragraph (2) is without prejudice.

Fed. R. Civ. P. 41(a)(2).

"Voluntary dismissal without prejudice is thus not a matter of right." Zagano v. Fordham Univ., 900 F.2d 12, 14 (2d Cir. 1990). "Factors relevant to the consideration of a motion to dismiss without prejudice include the plaintiff's diligence in bringing the motion; any undue vexatiousness on plaintiff's part; the extent to which the suit has progressed, including the defendant's effort and expense in preparation for trial; the duplicative expense of relitigation; and the adequacy of plaintiff's explanation for the need to dismiss." Zagano, 900 F.2d at 14 (internal quotation marks omitted). "These factors are not ...


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