Wolf Resources, LLC v. Derner

          ORDER ENTERING CONSENT DECREE

          CHRISTINE M. ARGUELLO UNITED STATES DISTRICT JUDGE

         This matter is before the Court upon the parties' Joint Motion for Entry of Consent Decree (Doc. # 41), which all parties executed on July 31, 2019 (Doc. # 41-1). For the following reasons, the Court grants the parties' Joint Motion for Entry of Consent Decree and enters the parties' Consent Decree.

         I. BACKGROUND

         Plaintiff Wolf Resources, LLC is a privately-held Colorado limited liability company “engaged in the acquisition, holding, exchange, and selling of oil and has mineral interests.” (Doc. # 1 at 2-3.) According to Plaintiff, Defendant Cody Denton's entity, Defendant Colorado Real Property Solutions, LLC, became a member of Plaintiff in 2017. (Id. at 4.) While working for Plaintiff, Defendant Denton held the title of Vice President of Acquisitions. (Id.) Defendant Corey Linton's entity, Core West Energy, LLC, became a member of Plaintiff in 2017. (Id.) While working for Plaintiff, Defendant Linton held the title of Vice President of Asset Management. (Id.) On March 1, 2018, all Defendants signed Plaintiff's Operating Agreement. (Id. at 5); see (Doc. # 1-1.) As of October 31, 2018, Defendants had membership interests in Plaintiff. (Doc. # 1 at 7.) On November 1, 2018, Defendants resigned from Plaintiff. (Id. at 9.) Plaintiff contends that prior to their resignations, Defendants “exfiltrated thousands, if not tens of thousands, of [Plaintiff's] files, including substantial amounts of . . . confidential and trade secret documents, ” failed to return those files, and “threatened to solicit [Plaintiff's] business relationships and compete against [Plaintiff], ” all in violation of the Operating Agreement. (Id. at 9-11.)

         Plaintiff brought suit against Defendants on February 21, 2019, alleging five claims for relief: (1) breach of contract; (2) misappropriation of trade secrets under the federal Defend Trade Secrets Act, 18 U.S.C. § 1836(b); (3) misappropriation of trade secrets under Colorado Uniform Trade Secrets Act, Colo. Rev. Stat. § 7-74-102(4); (4) unjust enrichment; and (5) tortious interference with contract. (Id. at 13-16.) Defendants deny Plaintiff's allegations and assert five counterclaims: (1) breach of contract; (2) violations of the Colorado Wage Claim Act, Colo. Rev. Stat. § 8-4-101, et seq.; (3) unjust enrichment; (4) fraud in the factum and in the inducement; and (5) a request for a declaratory judgment. (Doc. # 23 at 43-48.)

         The parties participated in a settlement conference with United States Magistrate Judge Michael B. Hegarty on June 25, 2019. (Doc. # 39.) After 12 hours of discussions, the parties resolved all claims and entered into a written Material Terms of Settlement agreement. See (Doc. # 37.) They report that Magistrate Judge Hegarty approved of the terms of the settlement. (Doc. # 41 at 1.) The parties finalized a formal settlement agreement in the weeks that followed. See (Doc. # 37.)

         The parties filed the Joint Motion for Entry of Consent Decree presently before the Court on July 31, 2019. (Doc. # 41.) They attach a proposed consent decree (the “Consent Decree”) “embodying the terms of the settlement” that all parties executed on July 31, 2019. (Doc. # 41-1.) The parties request that the Court enter the Consent Decree as the Court's final order and judgment in this matter because “[o]ne of the terms of the settlement is that the ‘Court will make the foregoing terms [of settlement] an order of the Court.'” (Doc. # 41 at 1.)

         II. LEGAL STANDARD

         “A consent decree is primarily a means by which parties settle their disputes without having to bear the financial and other costs of litigating.” Local No. 93, Int'l Ass'n of Firefighters, AFL-CIO C.L.C. v. City of Cleveland, 478 U.S. 501, 528-29 (1986). A consent decree that is entered in federal court “must be directed to protecting federal interests.” Frew ex rel. Frew v. Haskins, 540 U.S. 431, 437 (2004). In Firefighters, the Supreme Court held that a federal consent decree must: (1) “spring from and serve to resolve a dispute within the court's subject-matter jurisdiction;” (2) “come within the general scope of the case made by the pleadings;” and (3) “further the objectives of the law upon which the complaint was based.” 478 U.S. at 525.

         The Court may either “approve or deny the issuance of a consent decree.” United States v. State of Colo., 937 F.2d 505, 509 (10th Cir. 1991) (citing Berger v. Heckler, 771 F.2d 1556, 1568 (2d Cir. 1985)). The Court of Appeals for the Tenth Circuit has explained:

Because the issuance of a consent decree places the power of the court behind the compromise struck by the parties, the district court must ensure that the agreement is not illegal, a product of collusion, or against the public interest. The court also has the duty to decide whether the decree is fair, adequate, and reasonable before it is approved.

Id. (citing United States v. City of Miami, Fla., 664 F.2d 435, 441 (5th Cir. 1981)); E.E.O.C. v. RCH Colorado, LLC, No. 15-cv-02170-RM-NYW, 2016 WL 9735737, *2 (D. Colo. July 5, 2016).

         If the Court is not satisfied that a consent decree fulfills these criteria, the Court generally “is not entitled to change the terms of the agreement stipulated to by the parties.” Id. (citing Berger, 771 F.2d at 1568). “If deficiencies are found, it is proper for the district court to advise the parties of its concerns and allow them to submit a revised decree.” United States v. Weiss, No. 11-cv-02244-RM-MJW, 2013 WL 5937912, *2 (D. Colo. Nov. 6, 2013) (citing State of Colo., 937 F.2d at 509).

         III. ...