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FLS Transportation Services, Inc. v. Casillas

United States District Court, D. Nevada

December 6, 2017

FLS TRANSPORTATION SERVICES, INC., Plaintiff,
v.
ARLIEN CASILLAS,, Defendants.

          ORDER

         Defendant Arlien Casillas (“Ms. Casillas”) moves to disqualify attorney Robert W. Tormohlen (“Mr. Tormohlen”), his law firm, Lewis Rice, LLC (“Lewis Rice”) and local counsel. Holley Driggs, Walsh, Puzey & Thompson (“Holley Driggs”) from representing plaintiff FLS Transportation Services (USA) Inc. (“FLS”) in this action (ECF No. 60/61). FLS responded (ECF No. 69/70) and Ms. Casillas replied (ECF No. 77/78). The basis for the motion is that Mr. Tormohlen and Lewis Rice represented Ms. Casillas in prior lawsuit. This order follows.

         I. Procedural History

         This case is about the logistics business. FLS and OpenRoad are competitors, but this case also concerns another of their competitors, C.H. Robinson Worldwide (“CHR”), since a prior lawsuit between FLS and CHR is the basis of this motion. Logistics companies connect customers (retailers and manufacturers who need to ship things) with carriers (trucking companies and rail companies that can ship them (ECF No. 1).[1] These companies connect customers and carriers through their employees, called brokers, who determine customer needs and find carriers who can meet those needs. Brokers solicit customers through the use of proprietary information, such as carriers' specific routes, specific equipment, or price structures. The brokers execute the contract with customers. Brokers also execute contracts with carriers (“carrier contracts”) on behalf of their employers. The carrier contracts prohibit carriers from cutting out the middleperson (here FLS):

During the term of this Contract and for a period of one (1) year following its termination, Carrier shall not provide transportation services or related services to any of [FLS's] customers for which Carrier has provided services under this Contract, unless the shipments are tendered by [FLS]; provided, however, this provision shall not apply if Carrier has conducted business with such customer during the two years before [FLS] first tendered shipments to Carrier for such customer.

(ECF No. 1 at ¶ 58).

         The court also surmises that it is common for logistics businesses to require their employees to sign an employment agreement, which includes a confidentiality and non-solicitation provision similar to the one FLS and Ms. Casillas signed in this case. The “confidentiality provision” of that agreement prohibits Ms. Casillas from disclosing certain information deemed confidential:

Any information relating to our policies, processes, structures, operations, customers, or other employees acquired by you in the course of, or as a result of, your employment with [FLS] is considered confidential. Such information shall be treated as confidential, and may not be disclosed by you to any other person, firm or company during your employment or after without prior written authorization. Confidential information or other material includes but is not limited to financial information, plans, strategies, corporate information and any other information deemed “confidential, ” unless information is available to the general public or in the public domain.

(Id. at ¶ 23.)

         The non-solicitation provision of that same agreement provides as follows:

It is a term of this offer that you agree that during your employment, and for a period of 6 months following the termination of such employment for any reason whatsoever, you shall not either individually or in partnership or conjunction with any person or persons, firms, association, syndicate, company or corporation as principal, employee, contractor, shareholder or agent, directly or indirectly encourage any [FLS] employee to leave employment with [FLS].

(Id. at 24).

         The court now turns to the prior lawsuit in which Ms. Casillas was employed by CHR.

         A. Ms. Casillas's Prior Employment with C.H. Robinson Worldwide, Inc. and the 2008 Lawsuit

         FLS was not Ms. Casillas's first employer in the transportation logistics industry. As earlier noted, CHR is a competitor of FLS, and Ms. Casillas was hired to head CHR's new Reno office in November 2001 until May 2006 when she voluntarily resigned. (ECF No. 60, Ex. 5) CHR, like FLS, required Ms. Casillas to sign an employment agreement with covenants restricting the solicitation of employees and customers as well as the disclosure of confidential or proprietary information. See Id. FLS knew Ms. Casillas and other CHR employees were subject to restrictive covenants. See Id. at 11. Nevertheless, FLS recruited Ms. Casillas and other CHR employees and assured them it intended to challenge the enforceability of their obligations to CHR. See Id. at 10-11. FLS enticed CHR employees to join FLS with promises of lucrative commissions and bonuses, and it used CHR's former employees as part of its strategic expansion plan. See Id.

         In 2008, CHR sued FLS, its executives, and various former CHR employees, including Ms. Casillas, in Minnesota state court (ECF No. 60, Ex. 5) (C.H. Robinson Worldwide, Inc. v. FLS Transportation, Inc., , ” State of Minnesota District Court, County of Hennepin, Fourth Judicial District, Court File No. 27-CV-08-4789) (“CHR v. FLS”). FLS initially retained a Minnesota firm to jointly represent all defendants, including Ms. Casillas. (ECF No. 60 at 4). However, FLS later retained Mr. Tormohlen and Lewis Rice to represent all of the FLS defendants, and the case settled in February 2011 (ECF No. 69 at 23).

         B. Ms. Casillas's Employment with FLS from September 2006 through September 2016

         FLS employed defendant Ms. Casillas as the branch director of its Reno office beginning in September 2006. Ms. Casillas coordinated and managed the services that FLS provided through that office. She also managed and supervised other employees in the office including Berenisa Orozco and Cindy Dillard. Ms. Casillas and her colleagues in the Reno branch office were the primary or exclusive ...


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