United States District Court, N.D. California
ORDER GRANTING DEFENDANT'S MOTION TO TRANSFER AND
DENYING MOTION TO DISMISS AS MOOT
WILLIAM ALSUP, UNITED STATES DISTRICT JUDGE.
action, defendant moves to dismiss the complaint or
alternatively to transfer the action to the District of
Minnesota. For the reasons herein, the motion to transfer is
RocketPower, Inc. is a California-based corporation which
provides staffing services to companies in California,
Arizona, and Texas. Defendant Strio Consulting, Inc. is a
Minnesota-based corporation that supplies staffing solutions
in eighteen states. They entered into a non-exclusive verbal
agreement in 2017. In other words, RocketPower used
Strio's services for some of its clients, but not all
(Dkt. Nos. 8-1 ¶ 7; 11 at 4 n.2; 11-1, Exh. 5
¶¶ 2-3, 5-6, 10-11).
operative complaint references three separate contractual
relationships. First, the aforementioned 2017 verbal
agreement entered into by Strio and RocketPower.
Second, the agreements between RocketPower and its
clients. Third, the agreements between
Strio/RocketPower and their recruits (Dkt. No. 11-1, Exh. 5
¶¶ 9, 36-37, 60-61).
2017 verbal agreement provided that Strio and RocketPower
would split expenses and profits. RocketPower controlled the
business processes. Strio managed payroll and employee
benefits. Strio also helped RocketPower find recruits
(id. ¶¶ 9-11, 13, 16-17).
illustrate, when a RocketPower client identified a hiring
need, the client contacted RocketPower. In turn, both
RocketPower and Strio advertised the position and solicited
candidates to apply. A blended team of RocketPower and Strio
employees screened applicants and extended verbal offers to
selected candidates. Following the verbal offer, the same
RocketPower or Strio employee who made the verbal offer then
sent a written confirmation. The recruit would then be
operationally controlled by a RocketPower coordinator. Strio
executed the final paperwork. All of this is based on the
allegations in the complaint (id. ¶¶
executed one of three forms of agreement with
Strio/RocketPower: (i) an “Employment Agreement”;
or (ii) an “Independent Contractor Agreement”; or
(iii) a “Consultant Employment Agreement” (Dkt.
Nos. 8-1 Exhs. A, B; 11-3 Exhs. B, D, E). Sometimes these
agreements mentioned RocketPower, sometimes they did not. In
the examples of the employment and independent contractor
agreements provided, RocketPower is mentioned throughout - on
equal footing with Strio (Dkt. Nos. 8-1 Exhs. A, B; 11-3 Exh.
B). In contrast, in the examples of the consultant agreements
provided, RocketPower is never mentioned (Dkt. No. 11-3 Exhs.
operative complaint homed in on two particular recruits hired
through the above process who executed consultant
agreements. Both worked in California for two RocketPower
California clients. Specifically, in January 2018, a
RocketPower California-based client named Reflektive hired
Christine Covert through the RocketPower/Strio partnership.
In July 2018, another RocketPower California-based client
named Minted hired contractor Paula-Anne Sherron through the
RocketPower/Strio partnership (Dkt. No. 11-1, Exh. 5
¶¶ 36-37, 60-67).
terms of the agreements with these consultants were
identical. Both agreements contained covenants not to
compete, Minnesota forum-selection clauses, and Minnesota
choice-of-law provisions (although they both also stated that
the agreement “will be governed by the law of the state
in which the [s]ervices are primarily performed”). Both
agreements were solely executed by a Strio Representative and
the recruit. Neither form of agreement referred to
RocketPower (Dkt. No. 11-3 Exhs. D, E). Nonetheless,
RocketPower eventually allowed both consultants to accept
employment with RocketPower's clients. Strio never waived
the covenants not to compete in the recruits' agreements
(Dkt. No. 11-1, Exh. 5 ¶¶ 80-82, 86-87).
April 2019, the relationship between RocketPower and Strio
devolved into litigation with each bringing claims against
the other. First, on April 17, 2019, Strio filed its
complaint in the District of Minnesota against RocketPower
and no one else stemming from the 2017 verbal agreement
between the two companies (Dkt. No. 11-1, Exh. 1). Strio
alleged breach of contract, unjust enrichment, and civil
theft and conversion (id. at 6-7). Specifically,
Strio accused RocketPower of holding out on paying for
expenses and sharing its received profits (id.
¶¶ 29, 33-34, 37-39). On May 24, 2019, RocketPower
counterclaimed - accusing Strio of breaching the 2017 verbal
agreement among other claims (Dkt. No. 11-1, Exh. 3,
Counterclaim ¶ 38).
on April 30, 2019, RocketPower filed this action against
Strio in San Francisco Superior Court with no other
defendants (Dkt. No. 11-1, Exh. 4). Strio removed (Dkt. No.
1). The operative complaint alleged four claims: (i)
declaratory judgment that the non-compete provisions in the
contractor/consultant agreements are void under California
law; (ii) intentional interference with RocketPower's
contractual relations with its clients (like Minted and
Reflektive); (iii) negligent interference with prospective
economic advantage through its relations with its clients
(like Minted and Reflective); (iv) and violations of all
three prongs of Section 17200 of the California Business and
Professions Code (Dkt. No. 11-1, Exh. 5 at 12, 15-17).
now moves to dismiss or alternatively to transfer this action
to the District of Minnesota (Dkt. No. 8). This order follows