Opinion
3:22-cv-01010-AR
08-30-2023
WFG NATIONAL TITLE INSURANCE COMPANY, a foreign corporation, Plaintiffs, v. ZACH BAY, an individual, REBECCA VULGAS, an individual, STEWART TITLE COMPANY, a foreign corporation, Defendants.
FINDINGS AND RECOMMENDATION
JEFF ARMISTEAD, United States Magistrate Judge.
Plaintiff WFG National Title Insurance Company (WFG) brings this breach of contract action against its former employees, defendants Zach Bay and Rebecca Vulgas. WFG alleges that Bay and Vulgas solicited WFG's clients and employees to work with and for defendant Stewart Title Company (STC) in contravention of employment agreements that they entered into while employees of WFG. WFG also brings a claim against STC for intentional interference with WFG's contractual relations with Bay and Vulgas when, with knowledge of their employment agreements, STC encouraged Bay and Vulgas to violate the terms of those agreements.
Defendants Bay, Vulgas, and STC (collectively, defendants) move to dismiss the claims under Federal Rule of Civil Procedure 12(b)(6). They argue that the employment agreements are void and unenforceable under both ORS § 653.295 (2019) and Oregon common law, and that the agreements may not be modified as WFG suggests. (ECF Nos. 5, 7.) The court is unpersuaded by defendants' arguments and recommends denying their motions to dismiss.
In 2021, the Oregon legislature amended ORS § 653.295 effective January 1, 2022. 2021 Or. Laws Ch. 75, 1-2. The amended statute added a new subsection (2) and renumbered later subsections. Id. As relevant to this opinion, however, the substance of the statute remains unchanged. ORS § 653.295(1), (4) (2019); ORS § 653.295(1), (5) (2021). Consistent with the parties' briefing, this opinion refers to the 2019 version of ORS § 653.295. One notable difference in the 2019 version of ORS § 653.295 from its prior versions and the current version is that noncompetition agreements that fail to meet the statute's requirements are “voidable” and cannot be enforced by state courts. That is, the statutory text of ORS § 653.295 “read ‘void' until the statute was amended in 2007 to read ‘voidable' under Senate Bill (SB) 248 (2007). Or. Laws 2007, ch. 902, § 2.” Bernard v. S.B., Inc., 270 Or.App. 710, 718 (2015). And, the 2021 version of ORS § 653.295 now reads “[a] noncompetition agreement entered into between an employer and employee is void and unenforceable unless ..” The difference is not inconsequential. See id. at 719 (“The change evidences a legislative intent (perhaps in exchange for restricting the permissible scope of noncompetition agreements and narrowing the class of eligible employees) to treat noncompetition agreements-even those that do not strictly comply with the new statutory requirements-as presumptively valid rather than void ab initio.”). Although defendants, when making their arguments about ORS § 653.295, argue that the employment agreements are “void,” plaintiff does not respond by contending that defendants were required to take affirmative steps to avoid the obligations of the agreements. As plaintiff does not raise that argument and it is not necessary to resolve the motions to dismiss, the court does not address it.
The parties request oral argument. The court, however, does not believe that oral argument would be helpful in resolving the pending motions. See LR 7-1(d)(1).
BACKGROUND
The court construes as true the factual allegations of WFG's complaint. See Weston Family P'ship LLLP v. Twitter, Inc., 29 F.4th 611, 617 (9th Cir. 2022). WFG is a South Carolina corporation and title insurance company that does business throughout Oregon. Bay and Vulgas are Oregon citizens. STC is a Texas corporation. (Compl. ¶¶ 1-4, ECF No. 1-1.)
Bay was an Escrow Officer and Vulgas was an Escrow Assistant at WFG. As an Escrow Officer, Bay oversaw a team (Team Bay), that sold title insurance policies. Vulgas was member of Team Bay. Bay and Vulgas developed ongoing customer relationships for WFG by providing settlement services, generating policy jackets and closing letters, and answering questions from clients about the title process. (Id. ¶¶ 2-3.)
During Bay and Vulgas' employment, Team Bay's entire client base consisted of either preexisting or firm-developed clients or clients developed by the Team using WFG's marketing resources. (Id. ¶ 17.) WFG maintained confidential information related to those clients, including their names, histories, contact information, specific contact persons, needs, preferences, business strategies, and goals. (Id. ¶ 18.)
A. Employment Agreements
In 2021 and 2020, respectively, Bay and Vulgas entered into employment agreements with WFG. (Id. ¶¶ 8, 13.) The terms of those agreements remained in effect at the time of each employee's resignation. (Id. ¶¶ 9, 14, 20.)
The relevant provisions of the two agreements are identical. The agreements are governed by Oregon law. (Bay and Vulgas Employment Agreements (EAs) § 11.3., ECF No. 11.) In addition to regular wages and commissions, the agreements required WFG to pay Bay a “retention bonus,” and Vulgas a “signing bonus.” (Id. §§ 7.1-7.4.) The agreements describe the employees' duties to WFG, including obligations to bring business opportunities to the company and not to disclose the company's confidential information. (Id. §§ 5, 8.) The contracts also contain nonsolicitation provisions, applicable during employment and for six months after employment ends:
Employee shall not, directly or indirectly, as an employee, agent, consultant, contractor, member, manager, stockholder, director, officer, partner or in any other individual or representative capacity:
9.1 Solicit or transact business with a Client, Prospective Client or Vendor in connection with the type of products or services provided by the Company and its affiliates;
....
9.3 Solicit, encourage, or induce any employee of the Company to terminate his/her employment relationship with the Company or otherwise seek to influence or alter any such person's relationship with the Company.(Id. § 9.)
The agreements define “clients” as “any person or entity that has used the company or its affiliates at any time during Employee's employment with the Company.” (Id. § 8.4.2.) A “prospective client” is a person or entity “that is not a Client but with respect to whom, the Employee: (i) conducted, prepared, or submitted, or assisted in conducting, preparing or submitting, any proposal or client development or marketing plan” or “had substantial contact with or acquired or had access to confidential proprietary information or other substantial information as a result of or in connection with the Employee's employment with the Company” at any time during the one-year period before the employee's resignation. (Id.) “Vendor(s)” include “any person or entity that has provided products or services” to WFG during the same one-year period. (Id. § 8.4.4.)
Each agreement also contains a “Severability and Construction” clause:
If any section, subsection or provision hereof is for any reason found to be invalid or inoperative, that section, subsection or provision shall be deemed severable and shall not affect the validity of any remaining provision of this Agreement. If any provision is determined by a court to be overly broad and unenforceable, the parties agree and it is their desire that such court shall submit a reasonable judicially enforceable limitation in place of the unenforceable provision and that, as so modified, the provision shall be as fully enforceable as if set forth herein by the parties themselves in modified form. This Agreement shall be construed as a whole in accordance with its fair meaning, and shall not be construed for or against any particular party merely because that party or its attorneys prepared, drafted or proposed such language.(Id. § 11.4.)
B. Bay and Vulgas' Departure from WFG
Bay and Vulgas resigned from WFG on June 7 and June 8, 2022, respectively. Before resigning, Bay was conducting business on an STC email account. While still working at WFG, he diverted at least one closing from WFG to STC. Before and after their resignations, and at STC's direction, Bay and Vulgas caused WFG customers to switch their business to STC. (Id. ¶ 22.) Bay and Vulgas also tried to recruit other WFG employees to join STC. Cassidy Sommers, an Escrow Assistant, left WFG to join STC on June 8, 2022. (Compl. ¶¶ 20-23.)
On July 5, 2022, WFG filed an action in Multnomah County Circuit Court alleging claims for breach of contract against Bay and Vulgas, and one claim of intentional interference with contractual relations against STC. WFG also sought temporary restraining orders (TROs) against Bay, Vulgas, and STC. The TROs were denied on July 7, 2022. (Pl.'s Resp. Ex. 3 at 7 (Trans. of Proceedings, Mult. Cnty. Cir. Ct. July 7, 2022).) STC removed the case to this court on July 12, 2022, based on diversity jurisdiction (28 U.S.C. § 1332(a)(1)).
STC is an out-of-state defendant, but Bay and Vulgas are both Oregon citizens. (Compl. ¶¶ 1-3.) WFG filed this action in state court. After STC was served but before Bay and Vulgas received service, STC removed the action to federal court. The forum defendant rule bars removal “if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.” 28 U.S.C. § 1441(b)(2). Because STC removed this case before Bay and Vulgas were served, removal was not barred by the forum defendant rule. McAboy v. Intel Corp., Case No. 3:21-cv-01773-IM, 2022 WL 1519081, at *3 (D. Or. May 13, 2022) (“[T]he bar to removal under 28 U.S.C. § 1441(b)(2) is only triggered if the forum defendant is served.”).
LEGAL STANDARDS
Under Rule 12(b)(6), a party may move to dismiss a complaint for “failure to state a claim upon which relief can be granted.” FED. R. CIV. P. 12(b)(6). A court may dismiss “on the lack of cognizable legal theory or the absence of sufficient facts alleged” under a cognizable legal theory. UMG Recordings, Inc. v. Shelter Cap. Partners LLC, 718 F.3d 1006, 1014 (9th Cir. 2013) (quoting Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990)). To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007); see also CallerID4u, Inc. v. MCI Commc'ns Servs. Inc., 880 F.3d 1048, 1061 (9th Cir. 2018). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Teixeira v. Cnty. of Alameda, 873 F.3d 670, 678 (9th Cir. 2017).
The court must accept as true the allegations in the complaint and construe them in favor of the plaintiff. Teixeira, 873 F.3d at 678; see also Iqbal, 556 U.S. at 679; Kwan v. San Medica Int'l, 854 F.3d 1088, 1096 (9th Cir. 2017). Although a district court should grant the plaintiff leave to amend if the complaint might be cured by additional factual allegations, Doe v. United States, 58 F.3d 494, 497 (9th Cir.1995), “[d]ismissal without leave to amend is proper if it is clear that the complaint could not be saved by amendment,” Kendall v. Visa U.S.A., Inc., 518 F.3d 1042, 1051 (9th Cir. 2008).
Moreover, because the court has diversity jurisdiction, it must interpret and apply the substantive law of the forum state, which the parties agree is Oregon. See Erie Railroad v. Tompkins, 304 U.S. 64, 78 (1938). The Oregon Supreme Court has not directly addressed the question raised by the parties' arguments. Consequently, the court “must predict how the highest state court would decide the issue using intermediate appellate court decisions, decisions from other jurisdictions, statutes, treatises, and restatements as guidance.” Nelson v. City of Irvine, 143 F.3d 1196, 1206 (9th Cir. 1998).
DISCUSSION
Defendants move to dismiss all claims against them, arguing that: (1) the agreements do not satisfy the requirements for a valid noncompetition agreement under ORS § 653.295(1) (2019); (2) the agreements' nonsolicitation provisions are broader than ORS § 653.295(4)(b) (2019)'s carveout; (3) the agreements are illegal restraints on trade under Oregon common law because the restrictions are unreasonable; and (4) WFG does not allege sufficient facts to support its claim that Bay and Vulgas breached Section 9.1 of their agreements. (Defs.' Mot. to Dismiss at 2-3, ECF No. 5; Def.'s Mot. for Joinder at 2-4, ECF No. 7; Defs.' Reply at 9-10, ECF No. 10.) STC also argues that the unenforceability of the employment agreements requires dismissal of the intentional interference claim. (Def.'s Mot. for Joinder at 5.)
WFG responds that it is not seeking to enforce all the noncompetition provisions in the employment agreements. Rather, it seeks to enforce only the nonsolicitation provisions, and only to the extent permitted by ORS § 653.295(4)(b) (2019). (Pl.'s Resp. at 4-5, ECF No. 9; Compl. ¶¶ 30, 40.) According to WFG, Oregon case law and Section 11.4 of the agreements require severing the unenforceable provisions and enforcing the contract to the extent permitted by law. (Id. at 3-5.) WFG argues it has alleged plausible claims and defendants' motions should therefore be denied. Alternatively, WFG proposes that it be permitted to amend the complaint in lieu of dismissal. (Id. at 9.)
A. Noncompetition Agreements Under ORS § 653.295 (2019)
ORS § 653.295(1) (2019) provides that a noncompetition agreement between an employer and an employee is “voidable” and may not be enforced unless the certain requirements are met. Among the conditions that a valid noncompetition agreement must satisfy are (i) an employer must provide advance written notice that a noncompetition agreement is required as a condition of employment or the agreement must be entered into upon the “bona fide advancement” of the employee; (ii) the employee must be “exempt” as described in ORS § 653.020(3); (iii) the employee must have access to sensitive business information during employment; and (iv) the employee's yearly salary and commissions must meet a certain threshold. Id. § 653.295(1)(a)-(c), (e) (2019).
Subsection (4)(b) of the statute provides a carveout for certain nonsolicitation provisions. Id. § 653.295(4)(b) (2019); (Defs.' Mot. to Dismiss at 9.). The requirements that apply to noncompetition agreements under subsection (1) explicitly do not apply to any nonsolicitation covenants that are within the statutory carveout. Id. § 653.295(4) (2019) (“Subsections (1) and (2) of this section do not apply to . . . (b) A covenant not to solicit employees of the employer or solicit or transact business with customers of the employer.”). Despite that statutory carveout and that plaintiff is seeking only to enforce the nonsolicitation provisions of the agreement as allowed by ORS § 653.295(4)(b), defendants urge this court to determine that the agreements are void, which would render the nonsolicitation provisions unenforceable by plaintiff. As the court explains below, that is not how Oregon appellate courts view the enforceability of nonsolicitation provisions contained within nonenforceable noncompetition agreements.
B. Nonsolicitation Provisions Under ORS § 653.295(4)(b) (2019)
Defendants argue that, because the nonsolicitation provisions are broader than the statutory carveout, the agreements are void and ORS § 653.295(4)(b) (2019) does not apply, rendering those provisions wholly unenforceable. Further, defendants argue that the court may not modify the agreements to bring them within ORS § 653.295(4)(b) (2019)'s carveout. (Defs.' Mot. to Dismiss at 11; Def.'s Mot. for Joinder at 3-4.) WFG responds that the court must sever the illegal parts from the legal parts and enforce the contracts to the extent allowed by Oregon law. (Pl.'s Resp. at 3-4.)
1. The provisions in the agreement exceed the scope of the statutory carveout.
As noted, the statutory carveout in ORS § 653.295(4)(b) (2019) provides that the requirements applicable to noncompetition agreements described in subsections (1) and (2) of the statute do not apply to “covenant[s] not to solicit employees of the employer or solicit or transact business with customers of the employer.” The term “customers” in this context means “persons or entities who would reasonably be expected to return to the employer for purposes of doing business when the employer-employee relationship ended.” Oregon Psychiatric Partners, LLP v. Henry, 293 Or.App. 471, 480 (2018) (Henry I) (applying the statutory construction framework set out in State v. Gaines, 346 Or. 160, 171-72 (2009), and noting support for this definition in the statute's text, context, and legislative history, id. at 476-80).
The employment agreements prohibit Bay and Vulgas from soliciting any person or entity that has used WFG's services during their employment at WFG. (Bay and Vulgas EAs §§ 9.1, 8.4.2.) As written, this restriction would extend to a previous client who had not used WFG for many years before Bay and Vulgas' resignations. Such a client, however, would not reasonably have been expected to return to WFG at the time of Bay and Vulgas' departure. See Henry I, 293 Or.App. at 480-81 (concluding that a nonsolicitation provision that prohibited the defendant from soliciting “any patients who had received services” from the defendant during her employment was broader than allowed under the statutory carveout). Additionally, the employment agreements prohibit Bay and Vulgas from soliciting WFG's vendors. (Bay and Vulgas EAs § 9.1.) The statute, in contrast, provides no carveout for covenants not to solicit vendors. ORS § 653.295(4)(b) (2019). The court therefore agrees with defendants that the nonsolicitation provisions in the employment agreements are broader than permitted by the statutory carveout.
2. The provisions may be modified to fit within the statutory carveout.
“Under longstanding Oregon law, when an agreement is partly legal and partly illegal, if the legal may be separated from the illegal, the legal part will be enforced.” Henry I, 239 Or.App. at 481 (quoting Montara Owners Ass'n v. La Noue Dev., LLC, 357 Or. 333, 341 (2015)) (quotation marks omitted) (holding that a nonsolicitation provision should be enforced to the extent permitted by ORS § 653.295(4)(b) (2019) where the provision as written was broader than the statutory carveout and where the contract did not meet the requirements of ORS § 653.295(1) (2019)). Severance is appropriate even where the legal and illegal parts of a contract are “intermingled.” Montara Owner's Ass'n, 357 Or. at 342.
A court separates the legal from the illegal parts of a noncompete contract by carving a reasonable limitation from the contract's broader restriction. Eldridge v. Johnston, 195 Or. 379, 409 (1952) (“Even assuming that the geographical limitation [described in the contract] is unreasonable, yet the contract is severable, and out of that territorial limitation may be carved a reasonable area in which [the limitation] should be enforced.”). Put another way, Oregon law “endorses reformation if necessary to make a noncompete agreement reasonable in scope.” Ocean Beauty Seafoods, LLC v. Pacific Seafood Grp. Acquisition Co., 648 Fed.Appx. 709, 710-11 (9th Cir. 2016) (citing Eldridge, 195 Or. 379). Reformation is appropriate to modify an “unreasonable” restraint or to narrow a nonsolicitation provision that goes beyond the scope of ORS § 653.295(4)(b). See Brinton Bus. Ventures, Inc. v. Searle, 248 F.Supp.3d 1029, 1037-38 (D. Or. 2017) (amending unreasonable scope of noncompetition provision and reforming nonsolicitation provisions to apply only to “customers” instead of “customers or prospective customers”).
Defendants rely on cases from this district and the Wyoming Supreme Court to support their argument that the court should not “save” the agreements by construing them to comply with ORS § 653.295(4)(b) (2019). Those cases raise the concern that judicial reformation of noncompete agreements encourages employers “to overreach, if they know the worst that could happen is the court will strike the most egregious provisions.” Konecranes, Inc. v. Sinclair, 340 F.Supp.2d 1126, 1131 (D. Or. 2004); Hassler v. Circle C Res., 2022 WY 28, ¶ 23, 505 P.3d 169, 176 (Wyo. 2022) (“The [practice of judicial reformation] further tips the scales toward employers by encouraging them to draft noncompete agreements with overly broad and unreasonable trade restraints.”). There are legitimate policy concerns weighing against reformation of overbroad noncompetition agreements, particularly when those agreements are being enforced against a less-sophisticated party. Oregon law, however, “reflects a balancing” of the policies that weigh for and against the reformation of such agreements. Ocean Beauty Seafoods, 648 Fed.Appx. at 712.
Additionally, the employment agreements each contain a “Severability & Construction” provision. Those provisions expressly provide that the provisions of the employment agreements are severable. (Bay and Vulgas EAs § 11.4.) The provisions also provide that, if any provision of the agreement is determined to be overbroad, it is the parties' intent that the court substitute an enforceable limitation in place of the unenforceable provision, and that the modified provision be enforced. (Id.) The court can thus give effect to the express intent of the parties by modifying the agreements to comply with Oregon law.
In accordance with longstanding Oregon law and the parties' express intent, the court concludes that it may modify the nonsolicitation provisions to fit within ORS § 653.295(4)(b) (2019)'s carveout. Specifically, the court may modify Section 9.1 to apply only to “customers,” rather than to “Clients, Prospective Clients, or Vendors.”
3. Failure to Meet the Requirements of ORS § 653.295(1) (2019)
Defendants contend that the agreements are void and unenforceable because they do not meet the requirements of ORS § 653.295(1) (2019): the agreements were not entered upon a bona fide advancement of Bay or Vulgas (ORS § 653.295(1)(a) (2019)); and Vulgas' job duties and pay made her exempt (ORS § 653.295(1)(b) (2019)). Because WFG seeks to enforce its nonsolicitation provisions only to the extent that they are within (4)(b)'s carveout, and the requirements of subsection (1) do not apply to provisions within the carveout, it is irrelevant to WFG's claims whether Bay and Vulgas' employment agreements satisfy the subsection (1) requirements. Accordingly, the court need not decide whether the employment agreements comply with subsection (1).
C. Illegal Restraints on Trade Under Oregon Common Law
Defendants also argue that the employment agreements are illegal restraints on trade because the restrictions imposed are unreasonable as a matter of law. (Defs.' Mot. to Dismiss at 11-12.) WFG responds that defendants' argument is not appropriate for a motion to dismiss and that, in any case, the contractual provisions satisfy the common-law reasonableness test. (Pl.'s Resp. at 5-9.)
In Oregon, a contract in restraint of trade must meet three common law requirements to be enforceable:
(1) it must be partial or restricted in its operation in respect either to time or place; (2) it must be on some good consideration; and (3) it must be reasonable, that is, it should afford only a fair protection to the interest of the party in whose favor it is made, and must not be so large in its operation as to interfere with the interests of the public.Nike, Inc. v. McCarthy, 379 F.3d 576, 584 (9th Cir. 2004). When a noncompetition agreement is unlimited in scope, Oregon law requires courts to interpret the agreement to contain reasonable limitations, if possible. Kelite Products v. Brandt, 206 Or. 636, 654-55 (1956). Limitations that are not written into the contract may be implied by considering the purpose of the contract. Id. at 654.
The reasonableness of a restriction in a noncompete agreement “depends on the facts and circumstances of each particular case as it arises.” Eldridge, 195 Or. at 408. Whether a restriction constitutes an unreasonable restraint on trade “must be judged from the standpoint of the time and place when and where the contract is executed, and from the general nature of the business involved.” Id. Because this inquiry is fact-dependent, a court cannot determine, merely by looking at the contract, that a noncompetition provision is unreasonable as a matter of law. Lavey v. Edwards, 264 Or. 331, 335, 339 (1973) (holding that it was error for the trial court to determine as a matter of law that a noncompetition provision in a pension plan was an illegal restraint of trade); Renzema v. Nichols, 83 Or.App. 322, 323 (1987) (reversing trial court's dismissal of the plaintiff's action to enforce a noncompete, summarizing: “A noncompetition agreement which fails to set out a limitation as to territory is not void as a matter of law. If possible, the noncompetition clause should be interpreted so as to make the extent of its operation reasonable. What is reasonable depends on the facts.” (citing Lavey, 264 Or. at 334)).
According to defendants, Oregon Psychiatric Partners, LLP v. Henry, 316 Or.App. 726 (2022) (Henry II), supports their argument that this court should decide, at the motion-to-dismiss stage, whether the restraints in the agreements are reasonable. They point to the Henry II court's statement that “the legislature intended the employer to bear the burden of proving the agreement's enforceability.” (Defs.' Reply at 8, ECF No. 10) (citing Henry II, 316 Or.App. at 733). But an evidentiary burden of proof is imposed at summary judgment or at trial, not at the motion-to-dismiss stage, in which the plaintiff's allegations are accepted as true. See Swierkiewicz v. Sorema N. A., 534 U.S. 506, 510-11 (2002) (distinguishing between evidentiary burdens of proof and pleading standards, and holding that it was “not appropriate” to apply the relevant evidentiary burden “to the pleading standard that plaintiffs [were required to] satisfy in order to survive a motion to dismiss”). Further, Henry II described the plaintiff's burden to prove that specific patients at issue were “customers” under ORS § 653.295(4)(b), not that any specific restraints were “reasonable” under the common-law standard. Id. at 735. The defendants' cited authority does not support their argument that the court should, at this stage, determine whether the provisions that WFG seeks to enforce are “reasonable” restraints. Because the court cannot properly engage in such a fact-intensive inquiry at this stage, defendants' argument does not justify dismissal. Lavey, 264 Or. at 335; Eldridge, 195 Or. at 408.
D. Sufficiency of Factual Allegations
In their reply, Bay and Vulgas for the first time make the argument that WFG has not alleged sufficient facts to support its claims that Bay and Vulgas breached Section 9.1 of the agreements. (Defs.' Reply at 9-10.) A court may decline to address a new argument raised for the first time in reply briefing. See Tovar v. U.S. Postal Serv., 3 F.3d 1271, 1273 n.3 (9th Cir. 1993) (“To the extent that [a reply] presents new information, it is improper.”). However, the court will address defendants' argument.
A complaint must contain sufficient factual allegations to “plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation.” Starr, 652 F.3d at 1216. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 556). “The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Mashiri v. Epsten Grinnell & Howell, 845 F.3d 984, 988 (9th Cir. 2017) (quotation marks omitted). “[D]etermining whether a complaint states a plausible claim is context-specific, requiring the reviewing court to draw on its own experience and common sense.” Iqbal, 556 U.S. at 663-64.
Section 9.1 prohibits Bay and Vulgas from soliciting WFG's customers. Accepting the factual allegations as true, Bay began negotiating with STC, on behalf of himself and other members of his team, between February and June 2022. (Compl. ¶ 5.) Bay resigned from WFG on June 7, 2022. Vulgas, who was an escrow assistant on Bay's team, gave notice on May 31 and resigned on June 8. (Id. ¶ 20.) Another escrow assistant, Cassidy Sommers, resigned the same day as Vulgas. (Id. ¶ 25.) STC hired all three employees. It hired Bay and Vulgas for the purpose of acquiring WFG's market share and to take advantage of Bay and Vulgas' relationships. (Id. ¶ 48.) While employed at WFG, Bay had an STC email account and was conducting business through that account, including directing clients to STC through that account. (Id. ¶ 21.) Bay, “in concert with Vulgas,” diverted a closing to STC while both still worked at WFG. (Id. ¶ 22.)
Those facts allow the court to draw a reasonable inference that Bay was working for STC before his resignation and that he sent a customer to STC instead of WFG. Vulgas' notice of resignation one week before Bay left, her departure one day after Bay left, and her subsequent employment at STC allow the court to reasonably infer that she was planning to move to STC as of May 31 and that she assisted Bay in sending a customer to STC while she was an employee of WFG. Taken together, the factual allegations in the complaint are sufficient to establish “more than a sheer possibility” that Bay and Vulgas breached Section 9.1 of their employment agreements. Mashiri, 845 F.3d at 988.
E. Intentional Interference Claim
STC argues that WFG's claims against it for intentional interference must be dismissed. STC's argument relies on the premise that there is no contractual relationship between WFG and its two former employees because the employment agreements are void and unenforceable. (Def.'s Mot. for Joinder at 5.) It is true that the existence of a business or professional relationship, such as a contractual relationship, is a required element of an intentional interference claim. McGanty v. Staudenraus, 321 Or. 532, 535 (1995). But WFG has alleged that it had a contractual relationship with both Bay and Vulgas. (Compl. ¶¶ 8-9, 13-14.) And the court has determined that the employment agreements are enforceable to some extent. STC's argument for dismissing the intentional interference claim is unavailing.
CONCLUSION
For the above reasons, the motion to dismiss (ECF No. 5) and motion for joinder (ECF No. 7) should be DENIED. Any other pending motions should be DENIED as MOOT.
SCHEDULING ORDER
The Findings and Recommendation will be referred to a district judge. Objections, if any, are due within fourteen days. If no objections are filed, the Findings and Recommendation will go under advisement on that date. If objections are filed, a response is due within fourteen days. When the response is due or filed, whichever date is earlier, the Findings and Recommendation will go under advisement.