II LLC v. Charlene Lange (2016)

RULING ON DEFENDANT'S MOTION FOR STAY

Pending before the court is a motion filed by the defendant, Charlene Lange, asking the court for a stay of the proceedings in the above captioned case until resolution of an earlier filed related case now pending in the U.S. District Court for the Northern District of Illinois titled Act II Jewelry, LLC et al. v Elizabeth Ann Wooten et al., Case No. 1:15–cv–06950 (the Illinois action).  The defendant argues, inter alia, that the claims in the instant case are derivative of the claims filed in the Illinois action, and that in order to avoid conflicting results and to promote judicial economy, a stay should be granted.  The court agrees with the defendant.  For the following reasons, the court enters an order staying the proceedings until resolution of the Illinois action, or until further order of this court, whichever occurs earlier.  Also, this case is scheduled for a status conference on May 3, 2016 at 9:30 a.m. to review the status of the matters.

I

“[T]he power to stay proceedings is incidental to the power inherent in every court to control the disposition of the causes on its docket with economy of time and effort for itself, for counsel, and for litigants.  How this can best be done calls for the exercise of judgment, which must weigh competing interests and maintain an even balance.”  (Citations omitted.)  Landis v. North American Co., 299 U.S. 248, 254, 57 S.Ct. 163, 81 L.Ed.2d 153 (1936);  Lee v. Harlow, Adams and Friedman, P.C., 116 Conn.App. 289, 311–12, 975 A.2d 715 (2009).  “In the interests of judicial economy, a court may, in the exercise of its discretion, order that the second action be stayed during the pendency of the first action, even though the actions are pending in different jurisdictions.”  (Citation omitted.)  Sauter v. Sauter, 4 Conn.App. 581, 584–85, 495 A.2d 1116 (1985).  Thus, a stay is a procedural tool that may be employed to prevent duplicative litigation of the same issues and claims.  Cumberland Farms, Inc. v. Groton, 247 Conn. 196, 217–18, 719 A.2d 465 (1988).

II

Based on the submissions of the parties, and after hearing, the court finds as follows:  On March 30, 2015, the plaintiffs, Act II Jewelry, LLC and Kiam Equities Corporation, filed suit in Illinois against Elizabeth Ann Wooten and others alleging, inter alia, breach of a confidentiality agreement, breach of a loan agreement, breach of a key employee incentive bonus agreement, breach of fiduciary duty, tortious interference with contracts, violation of the Illinois Trade Secrets Act, civil conspiracy, violation of the Illinois Consumer Fraud and Deceptive Business Practices Act and other tortious interferences with contracts.  The gravamen of the action is that, until recently, Act II distributed “lia sophia” brand fashion jewelry through a network of sales representatives referred to as “sales advisors.”  The sales advisors primarily marketed the jewelry by holding jewelry parties in the homes of customers.  On and after December 1, 2014, Act II began winding down its operations, terminated its network and, inter alia, resorted to selling its proprietary jewelry designs over its internet website and by other e-commerce methods as it attempts to pay its creditors.  Plaintiffs allege that Wooten was Vice President of Product Development for Act II and that she and her team developed and marketed “lia sophia” jewelry collections during her employment with Act II. They allege that, in breach of various contractual, statutory and common-law duties, Wooten started a company called Adorable–U (AU) which, they allege, sells “lia sophia” brand jewelry as AU product.  Plaintiffs seek money damages and injunctive relief against Wooten and AU and others in the Illinois action.

In the instant case, plaintiffs allege that the defendant, Charlene Lange, was a sales advisor for Act II. They allege that she later became a founding leader for AU, meaning that she has a team of sales representatives beneath her;  and, despite being notified in writing that the sale of the subject styles of jewelry violated Wooten's contractual and other legal obligations, Lange continues to sell the pieces in question, and she enables and encourages others on her team to do so.  The complaint is in three counts alleging tortious interference with contracts, misappropriation of trade secrets, a violation of the Connecticut Unfair Trade Practice Act and unjust enrichment.  Plaintiffs seek money damages and injunctive relief against Lange.  Plaintiffs also have brought similar suits in Arizona, Colorado and Ohio against other former Act II sales advisors who are allegedly now working as founding leaders for AU. See Act II Jewelry, LLC et al. v. Mary Reed et al., Superior Court of Arizona, Maricopa County, Doc. No. CV–2015–011483;  Act II Jewelry, LLC et al. v. Stephanie Richard, District Court, El Paso County, Colorado, Case No.2015CV32871;  Act II Jewelry, LLC et al. v. Heather Marshman Dages, Court of Common Pleas, Franklin County, Ohio, Case No. 15CV008878.

III

Defendant argues, inter alia, that a stay is appropriate because the claims at issue in the instant case have as their lynchpin the resolution of claims at issue in the Illinois action;  that the plaintiffs are the same in both actions;  and that, although the defendants in these actions are not the same, the claims in the Connecticut action are entirely derivative of the Illinois claims.  In order to prove their claims in the Connecticut action that Lange assisted and/or participated in Wooten's alleged breaches of contractual, statutory or common-law duties, the plaintiffs must first prove that Wooten's alleged breaches occurred, defendant argues.  Wooten's alleged conduct is the subject of the Illinois action.  This, defendant argues, presents a situation that cries out for a stay of the Connecticut action in order to prevent potentially conflicting decisions, and to promote economy of time and effort for the court, for counsel, and for the litigants.

Plaintiffs concede that there are certain factual commonalities in both cases, but argue, inter alia, that the Connecticut case should not be stayed pending resolution of the Illinois action because Lange is not a party to the Illinois action, she is not subject to the jurisdiction of Illinois, and the causes of action are different.  Moreover, it would be prejudicial to the plaintiffs if this case were to be stayed because it would permit Lange to proceed with her ongoing wrongdoing, they argue.  However, they also represent that they are not seeking preliminary injunctive relief and, at this time, there is no legal impediment to Lange's continuing her business while the lawsuit proceeds.  Plaintiff's Brief of February 1, 2016, pp. 2–3.

The court finds the defendant's arguments to be more persuasive.  The key issue in the Connecticut case is whether Lange's sale of AU products is in violation of Wooten's contracts and legal obligations.  Indeed, most of the factual allegations in the case concern Wooten and AU. The Connecticut complaint even alleges the filing of the Illinois action as a significant factual event.  See Complaint, para. 22.  If it is determined that Wooten and AU have not breached any duty nor committed any violation, then it is most likely that Lange, as an AU sales representative, would not be subject to liability, either.  If Wooten and/or AU are found to have breached a duty or committed a violation, then Lange, likewise, might be subject to some liability.  Complete resolution of the issue of whether Wooten and/or AU have breached a duty or committed a violation most likely can only be made in the Illinois action because Wooten and AU are parties to the litigation there, and, thus, are subject to the Illinois court's orders.  They are not parties to the Connecticut case and, therefore, are not subject to the Connecticut court's orders.  Thus, it is clear that a decision in the Illinois action “may not settle every question of law and fact in suits [against other sales representatives in other jurisdictions] but in all likelihood it will settle many and simplify them all.”  Landis v. North American Co., supra, 299 U.S. 256.  Even assuming, arguendo, that some issues can be resolved in the Connecticut action without Wooten or AU being parties to the litigation in Connecticut, the resulting litigation would inevitably cause a duplication of effort and expense for all and could produce inconsistent results on the same issues vis-a-vis the simultaneous litigation elsewhere.  To avoid that specter, it would be most appropriate to grant the motion for stay in the instant case.

Similar motions for stay have been filed in the cases pending in Arizona, Colorado and Ohio against the other founding leaders.  Two motions have already been decided.  In both instances the courts have granted the motions for stay.  See Act II Jewelry, LLC et al. v. Mary Reed et al., Superior Court of Arizona, Maricopa County, Doc. No. CV–2015–011483, Minute Entry (February 24, 2016, Whitten, J.);  Act II Jewelry, LLC et al. v. Stephanie Richard, District Court, El Paso County, Colorado, Case No.2015CV32871, Order (February 1, 2016, Schwartz, J.).  This court will rule likewise.

IV

For the following reasons, the court enters an order staying the proceedings until resolution of the Illinois action, or until further order of this court, whichever occurs earlier.  Also, this case is scheduled for a status conference on May 3, 2016 at 9:30 a.m. to review the status of the matters.

Robert F. Vacchelli

Judge, Superior Court

Vacchelli, Robert F., J.