Free Motion to Strike - District Court of Arizona - Arizona

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Thomas A. Maraz (Bar No. 010993) Maureen A. Welsh (Bar No. 020954) GALLAGHER & KENNEDY, P.A. 2575 East Camelback Road Phoenix, Arizona 85016-9225 (602) 530-8000 Attorneys for Defendants UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA Physical Excellence, Inc., an Arizona corporation; Body-Of-Change, Inc., an Arizona corporation; Body Of Change International, L.L.C., a Delaware limited liability company, Plaintiffs, vs. Stephen Dow and Linda Dow, husband and wife; Dan Fahey and Jane Doe Fahey, husband and wife; Stephen Dow d/b/a Achieve Fitness; Beyond Fitness, L.L.C., a North Carolina limited liability company; John Does 1-V; Jane Does 1-V; Black And White Corporations 1-V, Defendants. Plaintiffs' entire Statement of Facts relies on the testimony and declaration of Ben Gregg, principal owner of Physical Excellence, Inc., Body of Change, Inc. ("BOC, Inc.") and Body of Change, Int'l ("BOC, Int'l"). Several portions of the Declaration should be stricken because they are based on previously undisclosed facts and/or are conclusions of law. First, the Declaration contains a brand-new allegation by Plaintiffs that BOC, Int'l is a successor-in-interest to Physical Excellence. Second, the Declaration contains No. CIV 03-0150-PHX-EHC DEFENDANTS' MOTION TO STRIKE PORTIONS OF BEN GREGG'S DECLARATION (Oral Argument Requested)

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1293385/17186.0001 Case 2:03-cv-00150-EHC

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mainly self-serving arguments and legal conclusions. For these reasons, a substantial portion of Mr. Gregg's Declaration should be stricken. I. ANY REFERENCE TO BOC, INT'L SUCCESSORSHIP MUST BE EXCLUDED Any facts presented in Defendants' Response that BOC, Int'l was a successor to Physical Excellence should not be considered by this Court. A critical issue to this litigation is which Plaintiff entities are privy to a breach of contract claim against Defendants under the Non-Compete Agreement ("Agreement"). Thus, a major issue is whether, under the Agreement, there are any legally cognizable successors-in-interest to Physical Excellence, which would inure to the benefit of that Agreement. On December 20, 2002, Plaintiffs filed their Original Complaint. At that time, Plaintiffs alleged that BOC, Inc. "for specific business purposes, is the successor in interest to Physical Excellence. . ." See Original Complaint, ¶ 2. Plaintiffs made no similar allegations regarding BOC, Int'l. Id. at ¶ 3. On February 17, 2004, Plaintiffs' Second Amended Complaint was filed with the Court.1 [DKT 100]. This Complaint made the same allegations regarding successorship for BOC, Inc. and, again, made no such allegations regarding BOC, Int'l. See Second Amended Complaint, ¶¶ 2-3. On June 17, 2005, Plaintiffs filed a Motion for Leave to Amend Complaint. [DKT 190]. Attached as Exhibit A to the Motion was Plaintiffs' proposed Third Amended Complaint. Once again, there were allegations of successorship as to BOC, Inc., but none to BOC, Int'l. See Exhibit A to Motion for Leave at ¶¶ 2-3. In addition, none of Plaintiffs' Disclosure Statements disclosed the alleged fact that BOC, Int'l is a successor-in-interest to Physical Excellence. Finally, none of Plaintiffs' pleadings contain any reference to BOC, Int'l's role as successor to Physical

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Upon information and belief, due to a technical error, there was never a First Amended Complaint lodged or filed with the Court.

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Excellence. In short, over the past two and a half years, Plaintiffs have been silent as to this issue, raising it only now, for purposes of creating a factual dispute to Defendants' First Motion for Partial Summary Judgment ("First Motion"). This is not the first time Plaintiffs have attempted to conduct discovery and ultimately a trial while refusing to specify their claims and damages. Plaintiffs--in the past--have been instructed by this Court to clarify which Plaintiffs are alleging damages for which claims. See 11/02/04 Order. [DKT 156]. Specifically, this Court ordered, among other things, that Plaintiffs "identify which Plaintiff is alleging injury from which Defendant for all future filings in this case." Id. Unfortunately, Plaintiffs did not comply with the spirit or letter of this Order. Consequently, Defendants filed a Sixth Motion in Limine raising their concerns that Plaintiffs had continued to "kitchen sink" their claims and damages. [DKT 159]. Because Plaintiffs had never made any allegation that BOC, Int'l was a successor, it was presumed by Defendants that BOC, Int'l was not a party to any claims related to the NonCompete Agreement: Moreover, because Body of Change International is not a party to [the breach of contract] claim, persons only affiliated with that party should not be able to testify as to any recruiting efforts that occurred in their gyms. Similarly, Body of Change International should be precluded from alleging any damages stemming from this alleged breach of the employment contracts. See Defendants' Sixth Motion, p. 7 (emphasis added). Tellingly, in Response to the Sixth Motion in Limine, Plaintiffs were silent as to any alleged BOC, Int'l successorship. Plaintiffs' Response only blurred the lines again alleging--without any legal support--that all three Plaintiffs were entitled to common law claims and breach of contract claims: The recruitment violations and claim for relief for intentional interference with business expectancy of those employment relationships are true of all three Plaintiffs. The existence of an agreement between Dow and Fahey and Physical Excellence, Inc. dictates contractual duties to avoid recruitment of all three Plaintiffs' employees. However, the common law
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implies a duty to avoid intentional interference with business expectancy. [Citation omitted]. Because this is both a common law duty and a contractual duty, the Plaintiffs have pled alternative theories of recovery in the form of claims for breach of contract, breach of implied covenant of good faith and fair dealing, breach of fiduciary duty, and tortuous interference with business expectancy. See Plaintiffs' Response, p. 3, ll. 13-23. Giving Plaintiffs the benefit of the doubt--that the past non-disclosure of BOC, Int'l's successorship status was mere inadvertence or mistake--Plaintiffs' Response would have been the perfect forum to allege that relationship between BOC, Int'l and Physical Excellence. Plaintiffs, however, made no such pronouncement. Plaintiffs, therefore, should not be able to raise it now to (1) offer facts in opposition to Defendants' First or Second Motions for Partial Summary Judgment and (2) allege at trial that BOC, Int'l was a party to the Non-Compete Agreement by right of successorship. Because Plaintiffs have never disclosed this alleged relationship, the only evidence in the record in support of BOC, Int'l's successorship is Ben Gregg's Declaration filed in support of Plaintiffs' Response to Defendants' First Motion. Defendants would, therefore, be highly prejudiced by having to defend this allegation without having the opportunity to conduct the appropriate discovery. Given that Plaintiffs have either inadvertently or intentionally withheld this allegation until the close of discovery and the eve of the dispositive motions deadline, coupled with Defendants' lack of opportunity to conduct discovery, Plaintiffs should be precluded from presenting any facts or legal arguments in support of BOC, Int'l's successorship. Consequently, paragraphs 15-19 and 21 of Ben Gregg's Declaration regarding BOC, Int'l being a successor to Physical Excellence should be stricken. II. COUNSEL'S ARGUMENTS AND CONCLUSIONS OF LAW ARE NOT APPROPRIATE IN DECLARATION There are several statements provided in Ben Gregg's Declaration that are merely arguments of counsel and conclusions of law. These statements are not appropriate for the declaration of a lay person, nor for factual support in opposition to a Motion for
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Summary Judgment. See also Defendants' Response to Plaintiffs' Separate Statement of facts filed concurrently and incorporated herein by reference. These arguments and conclusions of law are in paragraphs 16-22 and 23-27. Because these "facts" are not appropriate for summary judgment, they should be stricken from Ben Gregg's Declaration. In addition, because these are conclusions of law and legal arguments many cannot be based--as Mr. Gregg declares under penalty of perjury--on "first hand [sic] knowledge", and, on that basis, should also be stricken. RESPECTFULLY SUBMITTED this 29th day of August, 2005. GALLAGHER & KENNEDY, P.A. By: /s/ Maureen A. Welsh Thomas A. Maraz Maureen A. Welsh 2575 East Camelback Road Phoenix, Arizona 85016-9225 Attorneys for Defendants ORIGINAL of the foregoing filed electronically via the CM/ECF system this 29th day of August, 2005, with: Clerk of Court United States District Court Sandra Day O'Connor U.S. Courthouse 401 West Washington Street Phoenix, Arizona 85003 COPY of the foregoing hand-delivered this 29th day of August, 2005, to: The Honorable Earl H. Carroll United States District Court Sandra Day O'Connor U.S. Courthouse 401 West Washington Street Phoenix, Arizona 85003

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COPY of the foregoing electronically mailed via the CM/ECF system this 29th day of August, 2005, to: Russell A. Kolsrud, Esq. Ryan J. Lorenz, Esq. Norling, Kolsrud, Sifferman & Davis, P.L.C. 16427 N. Scottsdale Road, Suite 210 Scottsdale, Arizona 85254 Attorneys for Plaintiffs /s/ Jenifer L. Mills

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