Steves & Sons, Inc. v. Jeld-Wen, Inc.

252 F. Supp. 3d 537, 2017 WL 2177607, 2017 U.S. Dist. LEXIS 75308
CourtDistrict Court, E.D. Virginia
DecidedMay 17, 2017
DocketCivil Action No. 3:16cv545
StatusPublished
Cited by3 cases

This text of 252 F. Supp. 3d 537 (Steves & Sons, Inc. v. Jeld-Wen, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Steves & Sons, Inc. v. Jeld-Wen, Inc., 252 F. Supp. 3d 537, 2017 WL 2177607, 2017 U.S. Dist. LEXIS 75308 (E.D. Va. 2017).

Opinion

MEMORANDUM OPINION

Robert E. Payne, Senior United States District Judge

This matter is before the Court on DEFENDANT JELD-WEN, INC.’S MOTION FOR LEAVE TO AMEND ANSWER TO ADD COUNTERCLAIMS AGAINST STEVES & SONS, INC. (ECF No. 101). For the reasons set out below, the Court finds that the counterclaims are-permissive, not compulsory, and the DEFENDANT JELD-WEN, INC.’S MOTION FOR LEAVE TO AMEND ANSWER TO ADD COUNTERCLAIMS AGAINST STEVES & SONS, INC. (ECF No. 101) will be granted. However, the claims and the permissive counterclaims will be severed as outlined below.

BACKGROUND FACTS

Steves and Sons, Inc. (“Steves”) is a door manufacturer that purchases interior molded doorskins from JELD-WEN, Inc. (“JELD-WEN”).1 Interior molded doors-kins make up the front and back of interior molded doors. An interior molded door is made by sandwiching a wood frame and a hollow or solid core between two doors-kins. Interior molded doors are significantly less expensive than solid -wood doors. Steves currently does not make doorskins. JELD-WEN is a manufacturer of interior molded doorskins and also uses doorskins to make its own doors (i.e. JELD-WEN is vertically integrated). On May 1, 2012, the parties entered into a Long-Term Supply Agreement (“Supply Agreement”), whereby Steves agreed to purchase its-doorskins from JELD-WEN for eight years. (Compl, ¶ 17).

After the Supply Agreément was signed, JELD-WEN merged with another doors-kin manufacturer, Craftmaster. The merger left JELD-WEN as a vertically integrated company manufacturing and using its own doorskins. At that time, Masonite was another vertically integrated company that also manufactured, and used its own doorskins.2 On June 25, 2014, Masonite announced that it would no longer'be selling interior molded doorskins; rather, it would only 'be manufacturing doorskins solely for its use. (Compl. ¶ 23).3 As a result, JELD-WEN allegedly has a monopoly over the doorskin market.

In September -2014, JELD-WEN gave Steves written notice of the termination of the Supply Agreement. (Compl. ¶ 82). JELD-WEN takes the position that the agreement will expire in December 2019. Steves contends that is 21 months earlier than allowed. (Compl. ¶ 82).

. On June 29, 2016, Steves filed this action alleging that the merger between JELD-WEN and Craftmaster violated Section 7 of the Clayton Act, 15 U.S.C. § 18 (Count One). Steves also alleged that JELD-WEN had breached the Supply Agreement by providing inadequate doorskins and [540]*540canceling the contract early (Count Two) and that JELD-WEN had breached an express warranty in the Supply Agreement and the implied warranty of merchantability (Count Three). In Count Four, Steves sought a declaratory judgment on several Supply Agreement issues. In Count Five, Steves sought specific performance of the Supply Agreement throughout its specified term. Finally, in Count Six, Steves asserted a claim for Trespass to Chattels because JELD-WEN had defaced Steves’ products during an inspection permitted by the Supply Agreement. JELD-WEN filed its Answer (ECF No. 30) but raised no counterclaims.

Following an initial pretrial conference, on October 19, 2016, the case was set for jury trial to begin on June 12, 2017 (ECF No. 65). On November 10, 2016, an agreed upon schedule was set for the conduct of discovery, the filing of summary judgment motions, and the conduct of proceedings in preparation for the Final Pretrial Conference to be held on June 5, 2017 (ECF No. 70). Discovery commenced and, inter alia, documents were produced.

By ORDER entered on February 7, 2017 (ECF No. 90), all proceedings herein were stayed until March 8, 2017 to allow the parties to pursue settlement discussions under the auspices of Magistrate Judge Novak. That stay was subsequently extended until March 27, 2017 to allow a last effort to settle the case (ECF No. 95). After settlement efforts failed, JELD-WEN filed its DEFENDANT JELD-WEN, INC.’S MOTION FOR LEAVE TO AMEND ANSWER TO ADD COUNTERCLAIMS AGAINST STEVES & SONS, INC. (ECF No. 101) based on documents that Steves had produced in discovery before settlement negotiations failed.

The genesis of the proposed amendment lies in that Steves and Sons produced documents to JELD-WEN during the discovery period before it was stayed. JELD-WEN alleges that several of the emails produced by Steves show that Steves paid John Pierce (“Pierce”), a former employee at JELD-WEN, to sell to Steves JELD-WEN’s trade secrets and other confidential information relating to JELD-WEN’s doors and doorskins. JELD-WEN alleges that the emails also show that Pierce and Steves knew that their conduct was wrong because it violated Pierce’s employment agreement with JELD-WEN and that the parties sought to conceal their wrongful conduct.

JELD-WEN first became aware of these documents on January 4, 2017. On January 5, 2017, JELD-WEN contacted Steves’ outside counsel and demanded that Steves cease and desist any use of the trade secrets and confidential information that Steves had received from Pierce. JELD-WEN was prepared to file this motion on February 3, 2017; however, the parties were in the midst of a settlement meditation and had agreed to a stay.

On January 12, 2017, JELD-WEN issued a Rule 45 subpoena to Pierce, requesting that he produce documents and communications relating to his work with Steves. On January 23, Pierce provided a handful of documents related to his travel on behalf of Steves. On January 27, 2017, Steves supplemented its production of relevant documents and produced a July 20, 2016 email from Sam Steves’ assistant, showing that John Ambruz, another former JELD-WEN employee, was serving as a consultant to Steves. The email included an attachment entitled “Proposal for Expansion of Molded Skin Production Capacity Submitted by John Pierce, 1 May 2006,” a document that JELD-WEN claims it had sent, in confidence, to the Antitrust Division at the Department of Justice (“DOJ”) in the summer of 2012, in contemplation of its acquisition of Craft-master. Ambruz, who, in 2012, was a [541]*541JELD-WEN employee, was copied on the email because he was working with JELD-WEN’s lawyers in responding to the DOJ investigation. JELD-WEN’s counsel questioned Steves’ counsel as to how the document was obtained by Steves. Steves’ counsel provided that the Steves brothers did not recall receiving the document.

On January 12, 2017, JELD-WEN issued a Rule 45 subpoena to Ambruz. JELD-WEN received additional discovery pursuant to that subpoena which, according to JELD-WEN, “confirm[s] that Steves is poised to enter the doorskin market despite all of its allegations of insurmountable barriers to entry.” (ECF No. 187-1). The new production contained documents which JELD-WEN alleges is “new evidence [that] explicitly ties John Am-bruz’s work to that of Pierce, and the JELD-WEN trade secrets he stole.” Id.

This factual backdrop provides the basis for, and the context Of, DEFENDANT JELD-WEN, INC.’S MOTION FOR LEAVE TO AMEND ANSWER TO ADD COUNTERCLAIMS AGAINST STEVES & SONS, INC. (ECF No. 101).

DISCUSSION

Fed. R. Civ. P. 13 governs the filing of counterclaims. It delineates counterclaims as compulsory or permissive. Fed. R. Civ. P.

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Related

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Cite This Page — Counsel Stack

Bluebook (online)
252 F. Supp. 3d 537, 2017 WL 2177607, 2017 U.S. Dist. LEXIS 75308, Counsel Stack Legal Research, https://law.counselstack.com/opinion/steves-sons-inc-v-jeld-wen-inc-vaed-2017.