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Petrakopoulou v. DHR International

December 17, 2008

FALLYA PETRAKOPOULOU, PLAINTIFF/COUNTERDEFENDANT
v.
DHR INTERNATIONAL, INC., DEFENDANT/COUNTERCLAIMANT.



The opinion of the court was delivered by: Elaine E. Bucklo United States District Judge

MEMORANDUM OPINION AND ORDER

Fallya Petrakopoulou has sued her former employer, DHR International, for breach of the parties' employment agreement (the "Employment Agreement")*fn1 DHR has brought a counterclaim, identical to its affirmative defense, alleging fraudulent inducement. Before me is plaintiff's motion to dismiss defendant's counterclaim under Fed. R. Civ. P. 12(b)(6) and to strike defendant's affirmative defense under Fed. R. Civ. P. 12(f). For the reasons stated below, I grant plaintiff's motion.

I.

Defendant is an executive search firm headquartered in Chicago with offices throughout the world. In late 2005, defendant began discussions with plaintiff to open an office for defendant's business in Paris, France. These discussions culminated in defendant's letter offer of employment dated May 24, 2007, which plaintiff countersigned on June 1, 2007.

According to the Employment Agreement (i.e., the executed letter offer), plaintiff's employment would begin on or before September 1, 2007,*fn2 and she would have the title, among others, of Managing Director France.*fn3 The Employment Agreement is silent as to the nature of plaintiff's responsibilities, but the parties agree that she was hired to open an office to conduct defendant's business in Paris, France.

The Employment Agreement contains three sections, captioned "Compensation," "Notice Period," and "Agreement." The Compensation section sets forth a compensation structure that includes a base salary, a one-time signing bonus, and additional bonuses calculated as percentages of "collected search fees." The Agreement also sets forth a table outlining plaintiff's entitlement to "compensation on collected revenue."

The Notice Period section states, in its entirety: "Should [plaintiff] or [defendant] terminate [plaintiff]'s employment agreement, the notice period shall be 3 months or another mutually agreed timeframe."

The Agreement section states:

This Agreement constitutes the entire agreement between the parties hereto and contains all of the covenants, representations, and warranties of the respective parties, There are no oral representations or warranties between the parties of any kind. This Agreement may not be amended in any respect except by written instrument signed by the parties. Any oral amendments or modification will be of no force or effect and will be void."

On March 24, 2008, defendant advised plaintiff that her compensation would change to a "commission-only" arrangement. On March 27, 2008, plaintiff refused to agree to this change. Defendant treated plaintiff's response as an immediately effective resignation from defendant's employ. Plaintiff claims (and defendant does not dispute) that she has not had access to defendant's computer systems or received payment of any kind since that date.

II.

A motion to dismiss tests the sufficiency of claims, not their merit. Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). Because plaintiff is the movant, I must accept all well-pleaded allegations in the counterclaims as true and draw all reasonable inferences in defendant's favor. McMillan v. Collection Prof'ls, Inc., 455 F.3d 754, 758 (7th Cir. 2006). Dismissal is warranted only if the factual material in the counterclaims fails plausibly to suggest that defendant is entitled to relief. Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1965 (2007).

As a general rule, I may consider only the pleadings at the motion to dismiss stage. Rosenblum v. Travelbyus.com Ltd., 299 F.3d 657, 661 (7th Cir. 2002). Because the Employment Agreement is attached to the counterclaims and is referenced in and central to them, however, that agreement is considered to be part of the counterclaims. Centers v. Centennial Mortgage, Inc., 398 F.3d 930, 933 (7th Cir. 2005)("A copy of any written instrument which is an exhibit to a pleading is a part thereof for all purposes." Id., citing Fed. R. Civ. P. 10(c)). Moreover, to the extent the terms of the Employment Agreement conflict with the allegations in the counterclaims, the Employment Agreement prevails. Centers, at 993; Rosenblum, at 661 ("The court is not bound to accept the pleader's allegations as to the effect of the exhibit, but can independently examine the document and form its own conclusions as to the proper construction and meaning to be given the material." (quoting 5 Wright & Miller, Federal Practice & Procedure: Civil 2d § 1327 at 766 (1990))). Thus, defendant may plead itself out of court by attaching documents that show it is not entitled to judgment. See Centers, at 933.

The standard articulated above applies equally to plaintiff's motion to strike. Rizzo v. Ball Horticultural Co., No. 04 C. 6723, 2005 WL 1126538, at *3 (N.D. Ill., April 20, 2005) (citing Heller Fin., Inc., v. Midwhey ...


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