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John Stanton and Harv Straus v. Greenstar Recycled Holdings

March 31, 2011


The opinion of the court was delivered by: Brown, Chief Judge:



This matter comes before the Court upon the motion of Defendants Greenstar Recycled Holdings, LLC ("GRH"), and Greenstar, LLC ("Greenstar") (collectively "Defendants"), to dismiss, in part, the complaint filed by Plaintiffs John Stanton and Harv Strauss (collectively "Plaintiffs"). See FED. R. CIV. P. 12(b)(6). (Doc. No. 5) Plaintiffs oppose Defendants' present motion. (Doc. No. 8) The Court has considered the parties' submissions and their arguments during a teleconference conducted on March 28, 2011. Having done so, and for the following reasons, the Court will grant Defendants' motion. Further, in light of that decision, the Court will remand this case to New Jersey state court.


The following statement of facts assumes the truth of the allegations in Plaintiffs' complaint. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007).GRH is a Delaware company with a registered agent for service in Delaware and offices in Texas. Greenstar is a Delaware company with offices in Texas. Plaintiffs allege Greenstar is the parent of GRH. Plaintiffs were principals of Global Recycling Solutions, LLC ("Global") before Global's assets were acquired by Greenstar New Jersey, LLC ("Greenstar NJ"), another alleged subsidiary of Greenstar, in July 2008. As part of the Asset Purchase Agreement ("Purchase Agreement") governing the acquisition, Plaintiffs were hired by Recycled Holdings, LLC ("RH"). The Purchase Agreement is not at issue in this case. In July 2008, Plaintiffs each entered into an Employment Agreement ("Employment Agreement") with RH. Subsequently, GRH acquired RH and, Plaintiffs assert, became party to and bound by Plaintiffs' Employment Agreements. (Compl., ¶¶ 4, 5, 7, 8, 10, 14-17.)

The Employment Agreements at issue both offered Plaintiffs two-year and five-year special bonuses conditioned upon renewal of the New Global County Contract ("Contract"), and other milestones, on or before the two-year or five-year milestone date. (Compl., ¶¶ 30, 34.) Plaintiffs allege, and it appears undisputed, that the Contract was never renewed. Plaintiffs assert that but for Greenstar's allegedly arbitrary rejection of the Contract, Plaintiffs would have earned the two-year and five-year bonuses pursuant to the terms of their Employment Agreements. (Compl., ¶¶ 95, 98, 99, 103-118.)

Additionally, the Employment Agreements contain non-competition restrictive covenants that for two years preclude Stanton from working "within two hundred (200) air miles" of any GRH facility, and Straus from working "within one hundred (100) air miles" from any GRH facility. According to Plaintiffs' allegations, these restrictive covenants are supported by consideration, including a promise by GRH to pay Plaintiffs an amount equal to their base salaries through the end of the applicable terms of the Employment Agreements. (Compl., ¶¶ 127-138.)

Effective June 26, 2009, Straus was terminated without cause from GRH. On April 22, 2010, Stanton was terminated without cause from GRH. (Compl., ¶¶ 37, 40.) Plaintiffs claim that by withholding payment of special bonuses and by binding Plaintiffs to "onerous and unreasonable" non-compete covenants without bargained-for consideration, Defendants have breached the terms in the Employment Agreements, breached the implied duty of good faith and fair dealing, and unjustly enriched their corporations. (Compl., ¶¶ 127-138.)

Based generally upon the foregoing allegations, Plaintiffs filed suit in New Jersey state court. Defendants timely removed to this Court on November 1, 2010, based upon the parties' diversity of citizenship pursuant to 28 U.S.C. 1332. In their complaint, Plaintiffs lodge the following seven causes of action under New Jersey law: breach of contract (Counts I, II, III and V); breach of the implied covenant of good faith and fair dealing (Count VI); unjust enrichment (Count VII); and a demand for declaratory judgment rendering the non-compete restrictive covenants void and unenforceable (Count IV). In response, Defendants filed both the present motion to dismiss Counts I, II, V, VI, and VII pursuant to Rule 12(b)(6), and an answer that denies Plaintiffs' allegations in the remaining Counts III and IV. (Doc. Nos. 5, 6) As noted, Plaintiffs oppose Defendants' present motion. On March 28, 2011, after the present motion was fully briefed, the Court conducted a teleconference with the parties. During that teleconference, the parties addressed various issues, and most notably, stipulated that if Defendants' present motion is granted, the two remaining counts in Plaintiffs' complaint do not satisfy the $75,000 amount in controversy threshold for diversity jurisdiction pursuant to 28 U.S.C. 1332.


A. Standard of Review

Federal Rule of Civil Procedure 12(b)(6) permits a court to dismiss a complaint, or a count therein, for failure to state a claim upon which relief may be granted. Fed. R. Civ. P. 12(b)(6). In evaluating a motion to dismiss pursuant to Rule 12(b)(6), the Court is required to accept as true the facts and allegations contained in the complaint and all reasonable inferences drawn therefrom, and to view the facts in the light most favorable to the non-moving party. Sadruddin v. City of Newark, 34 F. Supp. 2d 923, 925 (D.N.J. 1999); see also Gen. Motors Corp. v. New A Chevrolet, Inc., 263 F.3d 296, 325 (3d Cir. 2001). "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff's obligation to provide the 'grounds' of his 'entitlement to relief requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, --- U.S. ----, 127 S.Ct. 1955, 1964-65 (2007) (internal citations omitted). To survive a motion to dismiss, a complaint must contain "enough facts to state a claim to relief that is plausible on its face," and the "[f]actual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true." Twombly, 127 S.Ct. at 1965, 1974. The Twombly plausibility standard requires that "the plaintiff plead[] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged" and demands a showing that there is "more than a sheer possibility that a defendant has acted unlawfully." Iqbal, 129 S. Ct. At 1949 (quoting Twombly, 550 U.S. at 556).

A court need not accept " 'unsupported conclusions and unwarranted inferences,' " Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir. 2007) (quoting Schuylkill Energy Res., Inc. v. Pa. Power & Light Co., 113 F.3d 405, 417 (3d Cir. 1997)). In determining whether to grant a motion to dismiss, a court may consider only the complaint, attached exhibits, matters of public record, and undisputedly authentic documents if the complainant's claims are based upon these documents. Pension Benefit Guar. Corp. v. White Consol. Indus., 998 F.2d 1192, 1196 (3d. Cir. 1993). Granting a motion to dismiss under 12(b)(6) is proper if the allegations in the complaint amount to no more than "[l]egal conclusions made in the guise of factual allegations . . . are given no presumption of truthfulness," Wyeth v. Ranbaxy Labs., Ltd., 448 F.Supp.2d 607, 609 (D.N.J.2006) (citing Papasan v. Attain, 478 U.S. 265, 286 (1986)). A claim may be dismissed with prejudice if amendment to the Complaint ...

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