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CRST Expedited, Inc v. Swift Transportation Co of Arizona, LLC

United States District Court, N.D. Iowa, Cedar Rapids Division

June 28, 2019

CRST EXPEDITED, INC, Plaintiff,
v.
SWIFT TRANSPORTATION CO OF ARIZONA, LLC, Defendant.

          MEMORANDUM OPINION AND ORDER

          C.J. WILLIAMS, UNITED STATES DISTRICT JUDGE

         TABLE OF CONTENTS

         I. BACKGROUND .................................................................. 2

         II. MOTION FOR RECONSIDERATION AND/OR CLARIFICATION . 5

         A. Reconsideration .......................................................... 6

         B. Clarification .............................................................. 14

         III. MOTION FOR CERTIFICATION ........................................... 15

         A. “Unenforceability” ...................................................... 18

         B. Restatement (Third) of Torts: Liability for Economic Harm . 21

         IV. CONCLUSION ................................................................... 23

         This matter is before the Court on Swift Transportation's (“defendant”) Motion for Clarification and/or Reconsideration of the Court's Order Applying Iowa Law to All 250 Driver Contracts at Issue (Doc. 183), and on defendant's Motion to Certify Questions Pursuant to Iowa Code Section 684A.1 and 684A.2 (Doc. 180). CRST Expedited, Inc. (“plaintiff”) timely resisted both motions (Docs. 187, 188), and the Court entertained oral argument on the motions on June 25, 2019. For the following reasons, defendant's Motion for Clarification and/or Reconsideration of the Court's Order Applying Iowa Law to All 250 Driver Contracts at Issue (Doc. 183) is granted in part, denied in part, and denied in part as moot. Defendant's Motion to Certify Questions Pursuant to Iowa Code Section 684A.1 and 684A.2 (Doc. 180) is denied.

         I. BACKGROUND

         On June 4, 2019, this Court entered its Order on the parties' cross motions for summary judgment. CRST Expedited, Inc. v. Swift Transp. Co. of Az., LLC, No. 17-cv-25-CJW-KEM, 2019 WL 2358407 (N.D. Iowa June 4, 2019) (“Swift”). Defendant's current motions both relate, in certain ways, to the Court's summary judgment ruling. The Court will not repeat the entirety of its summary judgment analysis in this Order and will, instead, summarize the relevant points and highlight the relevant issues. The following facts are excerpted from the Court's summary judgment Order:

Plaintiff and defendant are both commercial trucking companies that provide freight-hauling services throughout the country. To operate a semitrailer, an individual must possess a commercial driver's license (“CDL”). (Docs. 130-1, at 2; 146-1, at 2). The trucking industry, however, is facing a shortage of licensed drivers. (Docs. 130-1, at 1-2; 146-1, at 2). Plaintiff operates a driver training program that allows individuals to obtain their CDLs. (Docs. 130-1, at 2; 146-1, at 2). When individuals enroll in the training program, plaintiff advances the costs of transportation to the training site, lodging, drug tests, physicals, and tuition for the program. (See Docs. 130-1, at 2; 146-1, at 2). These advances are ultimately to be repaid to plaintiff either through a reduced rate of pay until the debt has been satisfied, or through a lump sum payment to plaintiff, as is explained below. (Docs. 140-1, at 8-9; 159-1, at 18, 20).
. . . [T]hose [trainees] who are hired by plaintiff sign a Driver Employment Contract (“Driver Contract”) (Docs. 140-1, at 12; 159-1, at 26). The Driver Contracts contain either an eight-month or a ten-month restrictive term, during which time the driver-signatory is prohibited from driving for one of plaintiff's “competitors.” (Docs. 130-2, at 51-52; 140-1, at 12; 159-1, at 28). If a driver is discharged or leaves employment before the restrictive term ends, the driver cannot work for any “CRST competitor” during the remainder of the restrictive term. (Docs. 130-2, at 51-52; 140-1, at 16; 159-1, at 38-39). In addition, a driver who leaves employment before his restrictive term ends is charged $6, 500, regardless of the amount of time remaining on his restrictive term. (Docs. 140-1, at 16; 159-1, at 38-39; see also, e.g., Doc. 130-2, at 52 (a representative Driver Contract that contains a $6, 500 liquidated damages provision)). Plaintiff asserts that if a driver repays the $6, 500, he is released from the contract. (Doc. 159-1, at 39).
Plaintiff brought suit alleging that defendant has actively recruited and continues to actively recruit plaintiff's drivers, even though those drivers remain within the restrictive terms of their Driver Contracts. (Doc. 43, at 4). Specifically, plaintiff asserts that defendant is aware that the drivers at issue remain within the restrictive terms of their contracts, and that defendant's conduct of actively recruiting its drivers is the cause of the drivers leaving plaintiff to drive for defendant. (Id., at 5-10). By hiring drivers who obtained their CDL at plaintiff's expense, plaintiff asserts that defendant is able to gain the advantage of hiring licensed commercial truck drivers without undertaking the expense of training those drivers. (Id., at 6-7). Based on these allegations, plaintiff brought claims for intentional interference with contract, intentional interference with prospective economic advantage, and unjust enrichment. (Id., at 5-8). Plaintiff also seeks permanent injunctive relief “enjoining [defendant] from any further or continued interference with [plaintiff's] prospective economic advantage and/or contracts with its drivers . . ..” (Id., at 8-10).
An essential element of plaintiff's tortious interference with contract claim is that the contracts with the drivers were valid. See Gen. Elec. Capital Corp. v. Commercial Servs. Grp., Inc., 485 F.Supp.2d 1015, 1025 (N.D. Iowa 2007) (citations omitted). Plaintiff's motion for summary judgment requests only that the Court find that the contracts were valid and that the Court “eliminate all affirmative defenses addressing that element.” (Doc. 130, at 3). Defendant's motion seeks complete summary judgment as to each of plaintiff's claims. (Doc. 138).

Id., at *1-2 (footnotes omitted). The Court ultimately granted summary judgment in defendant's favor as to the tortious interference with prospective economic advantage claim and plaintiff's request for injunctive relief. The Court granted partial summary judgment in defendant's favor on the unjust enrichment claim, and the Court granted partial summary judgment in plaintiff's favor in finding the contracts valid.

         The Court applied Iowa law in assessing the validity of the 250 contracts at issue here.[1] Id., at *3. In seeking to establish the invalidity of the contracts at summary judgment, defendant argued, in relevant part, that the non-competition provisions contained in the Driver Contracts were not supported by a protectable interest and that the lack of a protectable interest rendered the contracts void ab initio. See id., at *9 (summarizing defendant's contract validity arguments). The Court determined that it need not reach the issue of whether the contracts were supported by a protectable interest because the Court found that if the contracts did lack a protectable interest, the contracts would be rendered voidable, not void.[2] Id., at *13. Thus, under the Court's analysis in its summary judgment Order, the non-existence of a protectable interest would not have been dispositive.

         Relying on its argument that the non-competition provisions are not supported by a protectable interest, defendant now asks this Court to certify a question to the Iowa Supreme Court that would address the legal effect of a lack of a protectable interest. (See Doc. 180, at 1). Defendant also requests that the Court certify a second question that pertains to the type of interference that should be considered improper under a tortious interference with contract claim. (Id.).

         The questions for which defendant seeks certification do not form the basis for defendant's motion for reconsideration and/or clarification.[3] The motion for reconsideration and/or clarification is narrow and asks the Court 1) to engage in a conflict of laws analysis to determine which body of law to apply in determining the validity of each of the contracts at issue, 2) hold that laws of states other than Iowa apply to the majority of the contracts for purposes of determining the validity of the contracts, 3) alter or amend the summary judgment Order consistent with whether any or all of the contracts would be invalid under a body of law other than Iowa's, and/or 4) clarify and/or reconsider whether the Court will apply Iowa law to determine the validity of all of the contracts at trial. (Doc 183-1).

         The motion for certification, on the other hand, pleads that the questions that are the subject of the motion “go directly to some of [defendant's] defenses in this case and its anticipated jury instructions.” (Doc. 180, at 1).[4] Thus, defendant has not moved for reconsideration of the Court's summary judgment Order based on the answers that defendant anticipates the Iowa Supreme Court would give to the questions for which defendant seeks certification. In other words, defendant's motion for reconsideration largely seeks retrospective relief while the motions for clarification and for certification seek only prospective relief. The Court will first address defendant's motion for reconsideration and/or clarification before turning to the motion for certification.

         II. MOTION FOR RECONSIDERATION AND/OR CLARIFICATION

         Defendant's motion for reconsideration and/or clarification requests that the Court “alter or amend the [summary judgment Order] under Federal Rule of Civil Procedure 59(e), ” and/or “grant [defendant] relief from the judgment under Rule 60(b)(6).” (Doc. 183-1, at 7). Specifically, defendant “moves the Court for clarification and/or reconsideration of its [summary judgment Order] as it related to the application of Iowa law to the validity of the majority of the Driver Contracts at issue.” (Doc. 183, at 1). Defendant contends that the Court should engage in a conflict of laws analysis and apply a different body of law in assessing the validity of certain contracts. (Doc. 183-1, at 9-11). Under those governing bodies of law, defendant argues, the contracts would be void ab initio. (Id., at 13-26). Defendant also seeks clarification as to whether the Court will apply Iowa law at trial in assessing the validity of any or all of the contracts. (Id., at 10, 26-27).

         A. Reconsideration

         Federal Rule of Civil Procedure 59(e) addresses the Court's authority to alter or amend a judgment. Rule 60(b), on the other hand, addresses the Court's authority to “relieve a party . . . from a final judgment, order, or proceeding . . ..” The Eighth Circuit Court of Appeals has addressed the relevant Rule to consider when a litigant seeks “reconsideration” of a non-final order, such as an order that grants summary judgment only in part, thus leaving a portion of the case to be resolved at a later time.[5]

The Federal Rules of Civil Procedure do not account for “motions to reconsider.” “However, we have determined that motions for reconsideration are ‘nothing more than Rule 60(b) motions when directed at non-final orders.'” Elder-Keep v. Aksamit, 460 F.3d 979, 984 (8th Cir. 2006) (quoting Anderson v. Raymond Corp., 340 F.3d 520, 525 (8th Cir. 2003)). The [plaintiffs'] motion to reconsider was directed at a non-final summary judgment order because that order resolved only part of their dispute with [defendant]. Auto Servs. Co. v. KPMG, LLP, 537 F.3d 853, 856 (8th Cir. 2008) (“[A]n order dismissing fewer than all claims or parties is generally not a final judgment.”). Therefore, we consider the [plaintiffs'] motion to reconsider as we would a Rule 60(b) motion. . . .

Nelson v. Am. Home Assurance Co., 702 F.3d 1038, 1043 (8th Cir. 2012) (parenthetical alteration in original) (citation to internal footnote omitted). Because the Court's summary judgment Order disposed of only a portion of this case, the Court's summary judgment Order was a non-final order, and ...


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