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Levy Restaurant Limited Partnership v. Williamson

August 5, 2009


The opinion of the court was delivered by: Judge Blanche M. Manning


After working many years at Levy Restaurant Limited Partnership, defendant Hans R. Williamson left the company to work at the Yellowstone Club in Montana. Levy is now suing Williamson for alleged violations of a non-solicitation provision. Levy seeks, among other things, to recover payments made to Williamson pursuant to contingent compensation agreements known here as the Class B and Class D Equity Participation Awards. Williamson moves to dismiss the complaint. For the following reasons, the motion to dismiss [49-1] is denied in part and granted in part.

I. Facts

The well-pleaded facts are taken as true for purposes of this motion to dismiss. Levy operates restaurants and provides food services at sports and entertainment facilities. Williamson was a high-level executive employed by Levy from November 17, 1994, to February 22, 2007. While Williamson was employed by Levy, Levy offered him a special form of contingent compensation called the Class B Equity Participation Award. The award, granted as of January 1, 2000, provided that Williamson would receive 300,000 Class B Units, which would become fully vested, subject to certain conditions, as of January 1, 2004, or in the event of a change in control.

The Class B Award also includes a non-competition/non-solicitation provision, contained in Section 7, under which Williamson could not, for a period of two years after termination of his employment, solicit or induce any employee of Levy to leave Levy's employment. Levy contends that any violation of the non-solicitation provision meant that Williamson forfeited the value of the award pursuant to additional language in Section 7, which states as follows:

Employee acknowledges that violating any of the provisions of this Section 7 will result in irreparable injury to the Company and its Subsidiaries; accordingly, Employee agrees and acknowledges that a violation of this Section 7 shall result in forfeiture by the Employee of any and all rights to payments due or which may otherwise become due to Employee under this Award.

Levy further alleges that on October 1, 2002, Williamson entered into another award agreement with Levy, which it refers to as the Class D Equity Participation Award. Williamson was issued an additional award of 100,000 Class D units pursuant to the terms of the Class D Award, which in relevant part required Williamson to adhere to the non-solicitation terms of his Employment Agreement. Section 8(a) of Williamson's Employment Agreement provided that for a period of three (3) years following his termination, he "shall not, directly or indirectly, without the written consent of the Company, knowingly solicit, entice or persuade any other employee of the Company or its affiliated or parent companies, to leave the service of the Company or such affiliated or parent company for any reason."

According to Levy, at the time of the issuance of the Class D award, it gave a presentation during which the recipients were told that they would "forfeit all rights" if they violated the non-competition or non-solicitation sections of their employment agreements. In support of this allegation, Levy attaches to its SAC PowerPoint slides that were purportedly used during the presentation.

Pursuant to the terms of the Class B Award, Levy paid Williamson $235,000 on or about April 15, 2006, due to a change of control at Levy. At or about the same time, and for the same reason, Williamson was issued an accelerated payment of $116,666.00 with regard to his 100,000 Class D units. Williamson resigned on February 27, 2007.

Levy alleges that after Williamson left Levy, he solicited other employees to leave Levy or otherwise interfered with their employment at Levy in violation of his Employment Agreement and the terms of the Class B and Class D Awards. Specifically, Levy alleges that Williamson induced Ryan Tawwater to leave Levy and join Williamson's new company, the Yellowstone Club. Tawwater ultimately left Levy on June 14, 2008, and shortly thereafter began working at the Yellowstone Club. Levy also alleges that Williamson solicited Jack Cruise, a regional manager of operations, to leave Levy and work at the Yellowstone Club. Finally, Levy alleges that Williamson also told Tawwater, via e-mail, to ask another Levy employee, Andrew Van Ermen, if "he want [sic] to move to MT [Montana]."

Thus, Levy has filed the instant lawsuit alleging breach of contract and seeking forfeiture of the approximately $350,000 paid to Williamson under the terms of the Class B and Class D Awards. Alternatively, it alleges a claim for equitable restitution.

II. Standard

Rule 12(b)(6) permits a motion to dismiss a complaint for failure to state a claim upon which relief can be granted. To state such a claim, the complaint need only contain a "short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2).

As noted by the Seventh Circuit:

The Supreme Court has interpreted that language to impose two easy-to-clear hurdles. First, the complaint must describe the claim in sufficient detail to give the defendant "fair notice of what the ... claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1964-65 (2007)(quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)) (alteration in Bell Atlantic ). Second, its allegations must plausibly suggest that the plaintiff has a right to relief, raising that possibility above a "speculative level"; if it does not, the plaintiff pleads itself out of court. Bell Atlantic, 127 S.Ct. at 1965, 1973 n.14.

E.E.O.C. v. Concentra Health Services, Inc., 496 F.3d 773, 776 (7th Cir. 2007). See also Killingsworth v. HSBC Bank Nevada, N.A., 507 F.3d 614, 618-19 (7th Cir. 2007) (observing that Supreme Court in Bell Atlantic "retooled federal pleading standards" such that a complaint must now contain "enough facts to state a claim to relief that is plausible on its face.").

On a motion to dismiss under Fed. R. Civ. P. 12(b)(6), the court accepts the allegations in the complaint as true, viewing all facts, as well as any inferences reasonably drawn therefrom, in the light most favorable to the plaintiff. See Marshall-Mosby v. Corporate Receivables, Inc., 205 F.3d 323, 326 (7th Cir. 2000). "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 'entitle[ment] to relief' requires more than labels and ...

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