402 F.Supp.3d 1328
N.D. Ala.2019Background
- CS Ventures (owner of Cajun Steamer restaurants) sued former employee Jeffrey Thompson after he signed a Severance Agreement and Release and a Restrictive Covenant Agreement (RCA) for alleged post‑termination misconduct (soliciting employees, announcing a competing restaurant, making derogatory statements, and taking property).
- CS Ventures paid Thompson ~$1.19 million as severance in exchange for the Release and RCA; the RCA contained non‑compete, non‑solicit, and confidentiality covenants and a severability clause.
- Thompson moved to dismiss the Second Amended Complaint as a shotgun pleading and for failure to state claims under Rule 12(b)(6); CS Ventures pleaded 14 counts (breach of various contract provisions, rescission theories, torts, unjust enrichment, and injunctive relief).
- The court found the complaint not a shotgun pleading (each count gave enough notice) but dismissed multiple counts for failure to state claims, and modified the non‑compete term.
- Disposition: Dismissed without prejudice Counts 2, 3, 4, 5, 6, 7, 8 and Count 9 as to customers; allowed Counts 1 (modified), 10, 11, 12, 13, 14, and Count 9 as to the General Manager/Kitchen Manager to proceed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Shotgun pleading | Complaint sufficiently alleges facts and counts; gives notice | Complaint incorporates all prior paragraphs and is unclear | Denied—complaint not a shotgun pleading (counts gave adequate notice) |
| Enforceability of non‑compete (employee status & duration) | Thompson signed RCA as part of termination; he was an employee when documents executed | Not an employee at signing (effective termination date predated execution); five‑year term unreasonable | Denied dismissal on enforceability; court found fact issue on employee status and reduced duration from five to two years |
| Non‑solicit clause scope & damages | Clause enforceable; breaches occurred via solicitation | Clause overbroad (prohibits soliciting all employees) and plaintiff failed to plead damages | Granted dismissal—non‑solicit void under Ala. law; Count Two dismissed |
| Rescission for inadequate consideration | If RCA invalid, consideration for Release (Thompson's covenants) is inadequate given severance sum | Consideration adequate; inadequacy alone insufficient; severability preserves remaining covenants | Granted dismissal—Count Three (inadequate consideration) dismissed |
| Fraudulent inducement to sign Release/RCA | Thompson never intended to comply; post‑signing conduct shows intent | No particularized pre‑signing misrepresentations or omissions alleged | Granted dismissal—Count Four (fraud) dismissed for failure to plead with particularity (Rule 9(b)) |
| Mutual mistake rescission | (argued) | No facts pled supporting mutual mistake | Granted dismissal—Count Five dismissed (plaintiff conceded) |
| Breach of confidentiality | Thompson will misuse trade secrets in new restaurant | No factual allegation what confidential info was taken or used; damages not pled | Granted dismissal—Count Six dismissed (insufficient factual specificity and damages) |
| Breach of Release (defamatory acts toward Buie) | Statements about Buie breached Release protecting Releasees | Statements were about Buie (a Releasee); no damages alleged to plaintiff | Granted dismissal—Count Seven dismissed for failure to plead damages (breach of contract) |
| Defamation | Statements about Buie harm corporate reputation and thus CS Ventures | Plaintiff cannot recover for statements not directly about it; statements may be opinion; special damages not pled | Granted dismissal—Count Eight dismissed (no special damages; plausibly not defamatory per se) |
| Intentional interference with contract (employees/customers) | Thompson interfered with employee and customer relationships | No specific customers identified; interference with employees contested | Split: Denied dismissal as to solicitation of General Manager/Kitchen Manager; granted dismissal as to anonymous/customers claim |
| Unjust enrichment | Alternative equitable claim if contracts fail | Plaintiff has express contracts so claim improper | Denied dismissal—alternative pleading allowed at this stage |
Key Cases Cited
- Conley v. Gibson, 355 U.S. 41 (general pleading standard) (setting out Rule 8 notice pleading baseline)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard) (pleading must state plausible claim)
- Ashcroft v. Iqbal, 556 U.S. 662 (plausibility and courts need not accept legal conclusions)
- Paylor v. Hartford Fire Ins., 748 F.3d 1117 (11th Cir. 2014) (definition/risks of shotgun pleadings)
- Brooks v. Blue Cross & Blue Shield of Fla., Inc., 116 F.3d 1364 (11th Cir.) (Rule 9(b) particularity test elements)
- Pitney Bowes, Inc. v. Berney Office Sols., 823 So. 2d 659 (Ala. 2001) (non‑compete enforceable only if employee at time of signing)
- Robinson v. Computer Servicenters, 346 So. 2d 940 (Ala. 1977) (public policy and reasonableness concerns for employment restraints)
- Emps.' Benefit Ass'n v. Grissett, 732 So. 2d 968 (Ala.) (elements of breach of contract requiring damages)