Carrandi v. NetRoadshow, Inc.

Background

Lisa Carrandi sued her longtime former employer, NetRoadshow, Inc., in Marin County Superior Court. She alleged that post-employment restrictive covenants in her Employee Agreement were void, unenforceable, and unlawful restraints on her employment prospects under California Business and Professions Code sections 16600.5 and 17200. NetRoadshow removed the case to the Northern District of California based on diversity jurisdiction and moved to transfer it to the Northern District of Georgia.

The court noted that NetRoadshow had previously sued Carrandi in Georgia for breach of contract. Carrandi answered that complaint and asserted a counterclaim arguing that the restrictive covenants were void and unenforceable under section 16600.5. She later moved to dismiss that counterclaim, but the motion remained pending and no order had dismissed the counterclaim.

Analysis

The court granted the transfer motion on two independent grounds: the claim-splitting doctrine and the first-to-file rule.

The claim-splitting doctrine generally prevents a plaintiff from maintaining two separate actions involving the same subject matter against the same defendant. The court found that the parties were the same in the Georgia and California actions, even though Carrandi was the plaintiff in California and a counterclaim plaintiff in Georgia. Applying the transaction test, the court found that both actions arose from Carrandi’s employment and Employee Agreement, sought to invalidate the same restrictive covenants, involved the same alleged right to pursue work opportunities without unlawful restrictions, and would require substantially the same evidence. The additional unfair-competition and declaratory-relief claims in the California case did not change that conclusion.

The court also applied the first-to-file rule, a federal comity doctrine that allows a court to decline jurisdiction when a case involving the same parties and issues was filed earlier in another district. The chronology of the actions, the similarity of the parties, and the similarity of the issues supported transfer to Georgia, where the parties had first litigated the lawfulness of the restrictive covenants. The court stated that the rule can apply even when the later-filed case includes additional claims.

Disposition

The court GRANTED specially appearing defendant NetRoadshow’s motion to transfer. It DIRECTED the Clerk to transfer the action to the United States District Court for the Northern District of Georgia and to close the Northern District of California case. The order did not decide whether the restrictive covenants were ultimately valid or enforceable.

Judge

The order was signed by Haywood S. Gilliam, Jr., United States District Judge.