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RocketPower, Inc. v. Strio Consulting, Inc.

United States District Court, D. Minnesota

October 29, 2019

RocketPower, Inc., Plaintiff,
Strio Consulting, Inc., Defendant.

          Lisa R. Petersen, Cohne Kinghorn, Salt Lake City, UT; Courtland C. Merrill, Anthony Ostlund Baer & Louwagie, PA, Minneapolis, MN, for Plaintiff RocketPower, Inc.

          Tyler P. Brimmer and Adina R. Florea, Fafinski Mark & Johnson P.A., Eden Prairie, MN, for Defendant Strio Consulting, Inc.


          Eric C. Tostrud United States District Judge

         Before this business-tort case is done, it may fill every square on the civil procedure bingo card. It began life in California state court, was removed to federal court in the Northern District of California, and then was ordered transferred here by that court. Before actually transferring the case, that court also was presented with and denied as “a half-baked . . . tactical ploy” a motion seeking interlocutory appeal of the transfer order pursuant to 28 U.S.C. § 1292(b). ECF No. 32 at 2. Upon arrival here, this case was consolidated with a second case already pending in this District between the same parties “for all purposes, including discovery, motions, hearings, and trial.” Order at 2 [ECF No. 44].

         In lieu of answering in this case, Defendant Strio Consulting seeks dismissal of Plaintiff RocketPower's complaint on two grounds pursuant to Federal Rule of Civil Procedure 12(b)(6). First, Strio says that the federal district court that transferred this case here decided already that RocketPower's claims fail to the extent they are based on California law. According to Strio, the law-of-the-case doctrine forbids another federal district court from revisiting that decision. Next, Strio argues that RocketPower's claims in this case must be dismissed because they may be asserted only as compulsory counterclaims in response to Strio's complaint in the companion case and not in a separate, parallel case. Strio's motion will be denied. The transferor court did not decide the merits of RocketPower's claims. Regarding Strio's second argument, the claims RocketPower asserts in this case are not compulsory counterclaims in the consolidated companion case. Even if they were, the law would not preclude RocketPower from asserting its claims in its own separate complaint under the circumstances presented here.


         The basic facts leading to this dispute are easy to summarize. RocketPower and Strio worked together to provide a variety of worker-recruiting and related services to third-party businesses. RocketPower and Strio's relationship involved agreements of three types: an agreement between RocketPower and Strio; agreements between RocketPower and Strio on one side and workers on the other (“Worker Agreements”); and agreements between RocketPower and third-party businesses. In this case, RocketPower alleges essentially that Strio interfered with RocketPower's contractual relationships with third- party businesses and “its ability to place talented individuals with” these businesses. Am. Compl. ¶ 137 [ECF No. 1 at 30-49]. In the consolidated companion case, Strio is the plaintiff and alleges that RocketPower failed to pay Strio in line with their agreement. See generally Strio Consulting, Inc. v. RocketPower, Inc., No. 19-cv-1048, Compl. [ECF No. 1]. As with most cases at this early stage, describing the Parties' allegations in greater detail prompts questions the pleadings do not answer, but some details are necessary to resolving Strio's Rule 12(b)(6) motion.[2]

         RocketPower “provides talent solutions to rapidly growing companies, ” and Strio “is a consulting business that provides back office services for RocketPower.” Am. Compl. ¶¶ 5-6. Businesses “contract with RocketPower for assistance with finding and hiring, placement, management, and supervision of workers[.]” Id. ¶ 8. The Parties have a verbal agreement to work together to provide services to RocketPower's clients. Id. ¶ 9. Pursuant to this agreement, when a RocketPower client requests assistance in finding and hiring a worker, RocketPower advertises the position and begins soliciting qualified candidates to apply. Id. ¶ 12. Jointly, RocketPower and Strio then screen and extend job offers to applicants. Id. ¶¶ 13-15. Applicants who accept offers sign a Worker Agreement, and Strio drafted the Worker Agreements at issue here. Id. ¶ 15. Some of these Strio-drafted Worker Agreements reference both RocketPower and Strio as the employer; others refer only to Strio as the employer. Id. ¶ 38. Whether the Worker Agreements reference RocketPower or not, RocketPower alleges that all workers hired as a result of this joint RocketPower/Strio process were joint employees of RocketPower and Strio due to their shared control of the worker. Id. ¶ 19. In no case would a hired individual become an employee of RocketPower's client, at least not right away. See Id. ¶ 16.

         RocketPower's complaint in this case focuses on the Strio-drafted Worker Agreements, see generally Id. ¶¶ 100-144, and two in particular: one signed by Paula-Anne Sherron on July 10, 2018, and one signed by Christine Covert on January 29, 2018. Id. ¶¶ 62-99. Both the Sherron and Covert Worker Agreements reference only Strio as the employer, and both agreements contain identical non-competition provisions. See Decl. of Mathew Caldwell, Ex. D at 5-6, Ex. E at 5 [ECF No. 11-3]. In full, the non-competition clause in each agreement reads as follows:

Non-Competition. During the term of this Agreement and for one year after the termination of Consultant's employment relationship with Strio for whatever reason, whether such termination was by Strio or Consultant, and whether with or without cause, Consultant agrees that he or she shall not, as a principal, employer, stockholder, partner, agent, consultant, independent contractor, employee or in any other individual representative capacity:
1) Provide or attempt to provide directly or indirectly, or advise others of the opportunity to provide, any Services to any Client:
a. To which, within six (6) months prior to termination of Consultant's employment, Consultant has provided services in any capacity on behalf of Strio, or
b. To which, within ninety (90) days prior to such termination of Consultant's employment, Consultant has been introduced or about which Consultant has received information through Strio or through any Client for which Consultant has performed Services in any capacity on behalf of Strio or;
2) Retain or attempt to retain, directly or indirectly, for Consultant or any other party, the Services of any person, including any of Strio's employees, who was providing services to or on behalf of Strio within ninety (90) day [sic] before the termination of Consultant's employment, and to whom Consultant has been introduced or about which Consultant has performed Services in any capacity on behalf of Strio. For purposes of this paragraph, the term ...

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