UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION

TEKWAY INC.,

Plaintiff,

v.

AT&T SERVICES, INC.,

Defendant.

No. 20 C 4095

Judge Thomas M. Durkin

MEMORANDUM OPINION AND ORDER

Tekway alleges that AT&T tortiously interfered with certain employment 

contracts and relationships. AT&T has moved to stay these claims in favor of a 

lawsuit in Texas state court. R. 28. That motion is continued in accordance with this 

opinion and order.

Background

As the Court recounted in denying AT&T’s motion to dismiss, see R. 23 (Tekway

Inc. v. AT&T Servs., Inc., 2021 WL 916080, at *1 (N.D. Ill. Mar. 10, 2021)), Tekway 

is a staffing company that has contracted employees to AT&T since the 1990s. R. 1 ¶

21. Beginning in 2014, Tekway staffed AT&T positions through a third-party called 

Pinnacle. Id. In other words, Tekway no longer has a direct contractual relationship 

with AT&T, but instead has staffing contracts with Pinnacle, which in turn has 

contracts providing Tekway employees to AT&T. 

According to Tekway, two of its employees staffed with AT&T through Pinnacle 

became unhappy with their compensation. Tekway alleges that AT&T and Pinnacle 
2

managers helped these two employees find an alternative staffing company that 

would pay them more but allow them to continue to work with Pinnacle and AT&T. 

Tekway alleges further that when it discovered this activity, it terminated its 

contract with Pinnacle, see R. 1 ¶ 48, although Tekway was contractually obligated 

to continue to permit its employees already staffed with AT&T and Pinnacle to 

complete the terms of their staffing contracts. According to Tekway, AT&T and 

Pinnacle continued to attempt to convince these remaining employees to leave 

Tekway by threatening them with loss of their AT&T assignments if they did not. See

R. 1 ¶ 50. These actions allegedly caused two additional Tekway employees to leave 

their employment. Id. ¶ 53. Tekway brings claims in this case against AT&T for 

tortious interference with contract and tortious interference with prospective 

advantage and business relationships based on AT&T’s alleged disruption of 

Tekway’s employment relationships with the four employees.

Before Tekway filed this case, Pinnacle sued Tekway in Texas state court 

seeking a declaratory judgment that it properly terminated its contract with Tekway 

for cause, which also served to release the employees Tekway contracted to Pinnacle 

from their contracts with Tekway. In the Texas case, Pinnacle alleges that Tekway 

employees told Pinnacle that Tekway’s manager, Pavan Kumar Nallamala, was 

treating them in an abusive manner—including by threating deportation and 

requiring that they perform unpaid work at his house. See R. 30 at 18 (¶¶ 8-10). 

Pinnacle alleges that Kumar Nallamala learned of these communications by 

accessing the employees’ emails and became upset. Id. at 18 (¶¶ 11-12). When two 
3

Tekway employees eventually resigned from Tekway, giving two weeks’ notice, 

Kumar Nallamala immediately terminated their employment with Tekway and 

purported to terminate Tekway’s contract with Pinnacle, actions which Pinnacle 

alleges were in violation of the Tekway-Pinnacle contract. Id. at 19 (¶ 13). In 

response, on August 28, 2019, Pinnacle demanded that Tekway provided certain 

audits required by the contract. Id. (¶ 14). When Tekway failed to provide the audits, 

Pinnacle terminated the Tekway-Pinnacle contract “for cause,” since failure to comply 

with an audit request constitutes “cause” under that agreement. See R. 28-1 at 8 (¶ 

14).

The Texas case also includes counterclaims by Tekway against Pinnacle. See

R. 30 at 45-51. In claims for breach of contract and tortious interference with contract, 

Tekway alleges that Pinnacle induced Tekway employees to resign, see id. at 45 (¶ 

42), and acted in bad faith by breaching its contract with Tekway, see id. at 49 (¶ 57).

Analysis

AT&T argues that that the Court should exercise its “inherent authority” to 

stay this case until the Texas case is resolved because a decision in that case will 

resolve the claims in this case. See R. 28 at 1. AT&T contends that if Pinnacle prevails 

in the Texas case, AT&T cannot be liable for tortious interference with contract or 

tortious interference with business relationships. More specifically, AT&T argues 

that if Pinnacle did not breach the contracts, AT&T could not have tortiously 

interfered with them or the business relationships they memorialize, since an 

element of both claims is breach of the relevant contract or business relationship. See
4

Webb v. Frawley, 906 F.3d 569, 579 (7th Cir. 2018); Foster v. Principal Life Ins. Co.,

806 F.3d 967, 971 (7th Cir. 2015).

In opposition, Tekway first argues that the proper standard for analyzing this 

motion to stay is not found in cases setting forth the Court’s inherent power generally, 

but is the standard for addressing parallel federal and state cases found in Colorado 

River Water Construction District v. United States, 424 U.S. 800 (1976). AT&T 

counters that the Court is not required to follow Colorado River in exercising its 

inherent power. See R. 31 at 1-2 (citing Karol v. Old Second Nat’l Bank, 2020 WL 

6343088, at *6 (N.D. Ill. Oct. 29, 2020)). But the Supreme Court and the Seventh 

Circuit addressed this argument many years ago in the wake of Colorado River. See 

Calvert Fire Ins. Co. v. Will, 560 F.2d 792 (7th Cir. 1977), rev’d, Will v. Calvert Fire 

Ins. Co., 437 U.S. 655 (1978), on remand, Calvert Fire Ins. Co. v. Will, 586 F.2d 12 

(7th Cir. 1978). While these decisions were the products of divided courts, the upshot 

was that the proper way for a district court to exercise its inherent power to stay a 

federal case in the face of a potentially parallel state case is by following the Colorado 

River factors. See Calvert Fire, 586 F.2d at 14 (“[I]t follows logically that [five] Justices 

would . . . require the district court to determine whether its earlier deferral to 

concurrent state proceedings is now correct [according to Colorado River].”). So that 

is what this Court will do here.

Under Colorado River, the Court must first “determine whether the state and 

federal court actions are parallel.” Freed v. J.P. Morgan Chase Bank, N.A., 756 F.3d 

1013, 1018 (7th Cir. 2014). Suits are parallel if substantially the same parties are 
5

litigating substantially the same issues. See Adkins v. VIM Recycling, Inc., 644 F.3d

483, 498 (7th Cir. 2011). “Suits need not be identical to be parallel, and the mere 

presence of additional parties or issues in one of the cases will not necessarily 

preclude a finding that they are parallel.” AAR Int’l, Inc. v. Nimelias Enters. S.A., 250 

F.3d 510, 518 (7th Cir. 2001). “In essence, the question is whether there is a 

substantial likelihood that the state litigation will dispose of all claims presented in 

the federal case. Any doubt regarding the parallel nature of the [state] suit should be 

resolved in favor of exercising jurisdiction.” Adkins, 644 F.3d at 499. Indeed, 

application of the Colorado River doctrine must be done according to the principle 

that federal courts have a “virtually unflagging obligation . . . to exercise the 

jurisdiction given them.” Colorado River, 424 U.S. at 817.

AT&T is not a party to the Texas case, but the counterclaims Tekway brings 

against Pinnacle in Texas are materially similar to the claims it brings against AT&T 

here. In both cases, Tekway alleges that Pinnacle and/or AT&T induced Tekway

employees to breach their contracts and that Pinnacle’s breach of its contract was in 

bad faith, presumably in part at the behest of AT&T.

The Texas court will decide whether Pinnacle acted in bad faith in terminating 

its Tekway contract. Pinnacle seeks a declaratory judgment that it properly 

terminated its contract with Tekway. And Tekway alleges that Tekway’s termination 

was in bad faith. If the Texas court finds that Pinnacle acted in good faith by 

requesting the audit or otherwise terminating its contract, there will be no breach of 
6

a contract or business relationship for which AT&T could be liable with respect to 

Pinnacle’s contract with Tekway.

The Texas court will also decide whether Pinnacle induced the Tekway 

employees to breach their contracts. Tekway makes this allegation in support of its 

counterclaims. Thus, whether the employees were induced to resign is at issue in both 

this case and the Texas case. The Texas court could find that Pinnacle did not induce 

the employees’ resignations, without a finding that precludes AT&T’s interference in 

those relationships, leaving room for this court to make findings about AT&T’s

actions. But that is unlikely considering the close connection between Tekway’s 

allegations against Pinnacle and AT&T. Therefore, the Court finds that this case is 

parallel to the Texas case.

According to Colorado River, if a state case is parallel to the federal case, the 

Court must next determine whether “exceptional circumstances” exist to make a stay 

appropriate. See Freed, 756 F.3d at 1018. The factors relevant to that inquiry consider 

“giving regard to conservation of judicial resources and comprehensive disposition of 

litigation,” Colorado River, 424 U.S. at 817, including the “relative progress of the 

proceedings.” Freed, 756 F.3d at 1018. 

When this motion was filed, the Texas case was set to go to trial on April 20, 

2021. See R. 28 at 3. A review of the Texas court’s docket reveals that the trial has 

been postponed until February 2022. See Pinnacle Tech. Resources Inc. v. Tekway 

Inc., No. DC-19-14497 (193d Judicial Dist. Ct. Dallas Cnty. Apr. 6, 2021) (available 
7

at https://courtsportal.dallascounty.org/DALLASPROD and appended hereto).1 The 

Court is loath to have the parties in this case sit idly by for another eight months at 

least if there is a chance that by pursuing proceedings in this case the parties could 

resolve their dispute. Accordingly, the parties should file status reports of no more 

than five pages each setting forth their positions as to what discovery is necessary in 

this case, what portion of that discovery has already been taken in Texas, and the 

likelihood that the parties could brief summary judgment before a trial occurs in the 

Texas case.

Conclusion

Therefore, AT&T’s motion to stay [28] is continued. The status reports 

described above are due June 15, 2021.

ENTERED:

______________________________

Honorable Thomas M. Durkin

United States District Judge

Dated: June 8, 2021

1 Neither Tekway nor AT&T informed the Court about the change in the progress of 

the Texas case.