MWK Recruiting Incorporated v. Evan Jowers ( 2020 )

Case: 19-51064 Document: 00515630345 Page: 1 Date Filed: 11/06/2020
United States Court of Appeals
for the Fifth Circuit United States Court of Appeals
Fifth Circuit
FILED
November 6, 2020
No. 19-51064 Lyle W. Cayce
Clerk
MWK Recruiting Incorporated,
Plaintiff—Appellee,
versus
Evan P. Jowers,
Defendant—Appellant,
versus
Michelle W. Kinney; Kinney Recruiting, Limited;
Recruiting Partners GP, Incorporated; Counsel
Unlimited, L.L.C.; Robert E. Kinney; Kinney Recruiting,
L.L.C.,
Third Party Defendants—Appellees.
Appeal from the United States District Court
for the Western District of Texas
USDC No. 1:18-CV-444
Case: 19-51064 Document: 00515630345 Page: 2 Date Filed: 11/06/2020
No. 19-51064
Before Smith, Higginson, and Engelhardt, Circuit Judges.
Per Curiam:*
Defendant-Appellant Evan P. Jowers appeals an antisuit injunction
against related litigation commenced by Jowers in Hong Kong. For the
reasons stated herein, we VACATE AND REMAND.
I.
Evan P. Jowers is a former employee of a predecessor entity of
Plaintiff-Appellee MWK Recruiting, Inc. (“MWK”).1 Having been sued in
Texas for alleged misdeeds (including misappropriation of trade secrets) in
connection with his (former) employment, Jowers sought to open a second
litigation front by suing his former employer and its principal, Kinney
Recruiting Ltd., H.K. and Robert Kinney, for defamation in Hong Kong. On
November 12, 2019, however, the district court in the instant action granted
a motion for a foreign antisuit injunction filed by the “MWK Parties”—
MWK, Robert Kinney, Kinney Recruiting Limited, Michelle Kinney,
Recruiting Parties GP, Inc., Kinney Recruiting LLC, and Counsel Unlimited
LLC. Although the Hong Kong defamation suit is premised upon
communications made after Jowers’ employment had ended, the district
court found that adjudication of the issues in the Hong Kong defamation case
necessarily would duplicate determinations that the district court would be
making regarding the merits of the employer’s claims asserted in the instant
action.
*
Pursuant to 5th Circuit Rule 47.5, the court has determined that this
opinion should not be published and is not precedent except under the limited
circumstances set forth in 5th Circuit Rule 47.5.4.
1
According to MWK: “All the claims in this case against Jowers have been
assigned from Jowers’s former employers and lenders to MWK. For the sake of clarity,
although Jowers never worked directly for MWK, references to Jowers’s employer will be
references to MWK unless greater precision is required to convey the essential point.”
2
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Accordingly, the district court ordered Jowers “and all persons in
active concert or participation with him who have actual notice of this
injunction” to “dismiss their claims in the Hong Kong litigation.” The
district court additionally ruled that:
Jowers is enjoined from seeking relief in the Hong Kong litiga-
tion that would preclude the MWK [Parties] from proceeding
in this case or would interfere in any way with this Court’s ju-
risdiction over this matter, pursuing adjudication of any claims
or issues in the Hong Kong litigation that are pending for adju-
dication in this case, participating in any way in the Hong Kong
litigation, and filing any additional cases that would violate the
prohibitions set forth in this Order.
On November 19, 2019, Jowers filed his notice of appeal.
Thereafter, on December 11, 2019, the district court considered a mo-
tion filed by Jowers requesting that the November 12, 2019 injunction be
stayed pending appeal. Although the district court denied the request, it
modified the injunction such that Jowers was allowed to stay, rather than im-
mediately dismiss, the Hong Kong case against Kinney, pending this court’s
mandate in his appeal. The district court added: “Jowers shall not take any
other action in the Hong Kong case that would advance it unless strictly nec-
essary to prevent dismissal.”
II.
Even though “the ultimate decision whether to grant or deny a pre-
liminary injunction is reviewed only for abuse of discretion, a decision
grounded in erroneous legal principles is reviewed de novo.” Karaha Bodas
Co. v. Perusahaan Pertambangan Minyak Dan Gas Bumi Negara, 335 F.3d 357,
363 (5th Cir. 2003) (cleaned up).
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III.
It is well established that federal courts are empowered to enjoin per-
sons subject to their jurisdiction from prosecuting foreign suits. Kaepa, Inc.
v. Achilles Corp., 76 F.3d 624, 626 (5th Cir. 1996). Generally, to obtain a pre-
liminary injunction, a movant must demonstrate: (1) a substantial likelihood
of success on the merits; (2) a substantial threat of irreparable harm if the
injunction is not granted; (3) that the threatened injury outweighs any poten-
tial harm to the non-movant; and (4) that the injunction will not undermine
the public interest. Valley v. Rapides Par. Sch. Bd., 118 F.3d 1047, 1051 (5th
Cir. 1997). For a court to grant a permanent injunction, a plaintiff must suc-
ceed on the merits, in addition to demonstrating the other three factors. See
Amoco Prod. Co. v. Village of Gambell, Alaska, 480 U.S. 531, 546 n.12 (1987).
Injunctive relief is considered an extraordinary remedy, to be granted only
when the movant has “clearly carried the burden of persuasion” on all four
requirements. Karaha Bodas, 335 F.3d at 363 (cleaned up).
A foreign antisuit injunction is a special application of these injunction
rules. See id. at 364 (noting that a foreign antisuit injunction is a “particular
subspecies of preliminary injunction”). Thus, “the suitability of such relief
ultimately depends on considerations unique to antisuit injunctions.” Id.The Fifth Circuit has adopted a test that weighs “the need to ‘prevent vexa-
tious or oppressive litigation’ and to ‘protect the court’s jurisdiction’ against
the need to defer to principles of international comity.” Id. (citing Kaepa,
76 F.3d at 627, and MacPhail v. Oceaneering Int’l, Inc., 302 F.3d 274, 277 (5th
Cir. 2002)). An injunction against the prosecution of a foreign lawsuit may
be appropriate when the foreign litigation would: (1) frustrate a policy of the
forum issuing the injunction; (2) be vexatious or oppressive; (3) threaten the
issuing court's in rem or quasi in rem jurisdiction; or (4) cause prejudice or
offend other equitable principles. Kaepa, 76 F.3d at 627 n.9 (citing In re Un-
terweser Reederei, Gmbh, 428 F.2d 888, 890 (5th Cir. 1970)). In applying the
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test, this court has rejected the approach taken by some other circuits, which
“elevates principles of international comity to the virtual exclusion of essen-
tially all other considerations.” Kaepa, 76 F.3d at 627. Instead, the Fifth Cir-
cuit has noted that “notions of comity do not wholly dominate [the] analysis
to the exclusion of these other concerns.” Karaha Bodas, 335 F.3d at 366.
To determine whether proceedings in another forum constitute “vex-
atious or oppressive” litigation that threatens the court’s jurisdiction, the do-
mestic court considers whether the following interrelated factors are present:
(1) inequitable hardship resulting from the foreign suit; (2) the foreign suit’s
ability to frustrate and delay the speedy and efficient determination of the
cause; and (3) the extent to which the foreign suit is duplicative of the litiga-
tion in the United States. Kaepa, 76 F.3d at 627.
In granting Jowers’ motion, the district court referenced the consid-
erations delineated in Karaha Bodas. Although it determined that litigating in
Hong Kong would not pose an inequitable hardship to the MWK entities, and
the Hong Kong suit would not frustrate and delay the district court’s deter-
mination in the domestic case, it concluded the claims in the Hong Kong suit
“substantially and logically duplicate” those in the domestic case. Based on
this assessment, the district court found the Hong Kong suit to be vexatious
and oppressive. It additionally concluded that granting a foreign antisuit in-
junction would not harm “valid interests in preserving international comity,
as the Fifth Circuit has explained them.”
Regarding these conclusions, the district court reasoned, in pertinent
part:
The extent to which the Hong Kong suit duplicates this
case is a closer call. Ultimately, however, the Court holds that
the Hong Kong suit is intrinsically linked to this case—so much
so that it is fair to say the Hong Kong suit effectively duplicates
this case and is properly considered vexatious and oppressive
as a result.
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....
. . . [T]he Sindhi [v. Raina, No. 3:15-CV3229-D, 2018
WL 1964198, at *2 (N.D. Tex. Apr. 26, 2018)] court recog-
nized that “the Fifth Circuit has not explicitly adopted the
compulsory counterclaim rule,” [but] nevertheless found “the
compulsory counterclaim standard instructive in defining
whether foreign litigation is duplicative and vexatious.” It then
proceeded by “assess[ing] whether the claims in the [foreign]
suit bear a logical relationship to the claims in the [domestic]
suit” . . . without determining “whether the [foreign] claims
are compulsory counterclaims under Rule 13(a).” Id. That
standard dictates that a counterclaim is compulsory when “the
same operative facts[] serve as the basis of both claims or the
aggregate core of facts upon which the claim rests activates ad-
ditional legal rights, otherwise dormant, in the defendant.” Id.(quoting United States v. Aronson, 617 F.2d 119, 121 (5th Cir.
1980)).
. . . The Court agrees that this approach is appropriately
“consistent with the purpose of [Federal Rule of Civil Proce-
dure] 13, which is to ‘prevent multiplicity of actions and to
achieve resolution in a single suit of all disputes arising out of
common matters.” Kaepa, 76 F.3d at 628 n.14.
In Sindhi, the foreign suit involved defamation claims,
by the domestic defendant against the domestic plaintiff,
“relat[ing] to the same factual allegations underlying” the for-
eign suit: that the domestic defendant had stolen proprietary
and confidential information during his employment to “create
a substantially similar competing” product.” Id., [sic] at *3. On
these facts, the court determined a logical relationship existed
and issued an antisuit injunction restraining the foreign claims
that duplicated their domestic counterparts. Id.Here, the Hong Kong suit (which consists solely of def-
amation claims at this point) appears to concern statements
made by Kinney to Jowers’s potential clients and business part-
ners concerning Kinney’s view of Jowers’s conduct during
Jowers’s employment by Kinney. In other words, the Hong
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Kong suit appears to exclusively involve claims about Jowers’s
conduct during his employment—the precise subject of the do-
mestic case. The same operative facts serve as the basis of both
sets of claims; a logical relationship exists between them. As a
result, the Court finds that the Hong Kong suit duplicates the
domestic case and is therefore appropriately deemed vexatious
and oppressive.
....
Finally, concerns of international comity do not bar, or
even counsel much against, the Court’s issuing a foreign an-
tisuit injunction. True, this is not a case in which a final judg-
ment has been issued in the domestic court, lessening comity-
related concerns of impinging on the foreign court’s jurisdic-
tion. See Karaha Bodas, 335 F.3d at 371. But here, “no public
international party is implicated by the case,” which ultimately
involves “a private party engaged in a contractual dispute with
another private party.” Kaepa, 76 F.3d at 627. And “the dis-
pute has been long and firmly ensconced within the confines of
the United States judicial system”: Jowers “appeared in an ac-
tion brought in Texas, removed that action to a federal court in
Texas . . . and only then, with the federal action moving steadily
toward trial,” brought logically related claims in Hong Kong.
Id. Like in Kaepa, nothing about an injunction “actually threat-
ens relations between the United States and” Hong Kong. Id.Especially given the Fifth Circuit’s stance highlighting that
comity concerns are not paramount, see Karaha Bodas, 335 F.3d
at 366, comity concerns do not impose an obstacle to a foreign
antisuit injunction here.
The district court thus concluded that the logical-relationship test was the
appropriate method for ascertaining whether the Hong Kong suit was
duplicative. Reviewing that legal conclusion de novo, we conclude, for two
reasons, that the court erred in applying the logical-relationship test.
First, application of the logical-relationship test is inconsistent with
our precedents. That test allows a court to conclude—as the district court
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did here—that two claims are duplicative so long as they share underlying
“operative facts.” Sindhi, 2018 WL 1964198, at *2 (cleaned up). But the
duplicative factor is about legal, not factual, similarity. We find suits to be
duplicative where they involve the “same or similar legal bases,” Karaha
Bodas, 335 F.3d at 370, or “identical claims,” Kaepa, 76 F.3d at 627.2 For
instance, in Kaepa, the foreign suit involved “mirror-image claims,” because
both the suit in the United States and the suit in Japan claimed fraudulent
inducement and breach of contract. Id. at 626. On remand, the court should
thus consider whether the United States and Hong Kong suits share the
“same or similar legal bases,” not whether facts about Jowers’ employment
are relevant to both suits. Karaha Bodas, 335 F.3d at 370.
Second, use of the logical-relationship test would erroneously increase
the frequency of antisuit injunctions. It is well established that an antisuit
injunction, like all preliminary injunctions, is “an extraordinary remedy.”
Karaha Bodas, 335 F.3d at 363 (cleaned up). Use of the logical-relationship
test would make antisuit injunctions much more commonplace, given that
only some relevant factual connection would render a foreign suit
duplicative. Here, for instance, the district court based its injunction solely
on the premise that the two suits shared some operative facts, even where the
two other factors that help to establish vexatious or oppressive litigation—
inequitable hardship along with frustration and delay—were admittedly
2
See also Allendale Mut. Ins. Co. v. Bull Data Sys., Inc., 10 F.3d 425, 430–31 (7th
Cir. 1993) (finding “an absurd duplication of effort” where a party had “parallel lawsuits”
in the United States and France). Although they do not apply the “duplicative” label,
other circuits also impose a higher bar than “logical relationship,” asking instead whether
“resolution of the case before the enjoining court would be dispositive of the enjoined
action.” Paramedics Electromedicina Comercial, Ltda v. GE Med. Sys. Info. Techs., Inc., 369
F.3d 645, 653 (2d Cir. 2004) (cleaned up); accord Canon Latin Am., Inc. v. Lantech (CR),
S.A., 508 F.3d 597, 601 (11th Cir. 2007); E. & J. Gallo Winery v. Andina Licores S.A., 446
F.3d 984, 991 (9th Cir. 2006).
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absent.3 Reliance on the logical-relationship test, therefore, lowers the bar for
antisuit injunctions, rendering them commonplace. That result is contrary to
our precedent.
IV.
Given the foregoing, we find it appropriate to vacate the district
court’s November 12, 2019 and December 11, 2019 orders and remand for
further consideration and assessment—of the MWK Parties’ motion for
injunction—in accordance with this ruling.
VACATED AND REMANDED.
3
The parties contest whether the presence of only one of the three vexatious or
oppressive litigation factors is sufficient to buttress an antisuit injunction. Blue Br.29; Red
Br.23. Because the district court erroneously applied the logical-relationship test in
determining the duplicative factor, we do not reach the issue of whether the vexatious or
oppressive litigation factors are conjunctive or disjunctive.
9