Brightview Grp. v. Teeters

BRIGHTVIEW GROUP, LP Plaintiff, v. ANDREW M. TEETERS, et al., Defendants.

Civil Case No. SAG-19-2774

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

March 26, 2021

MEMORANDUM OPINION

Brightview Group, LP ("Brightview") filed this lawsuit against its former employees, Andrew M. Teeters and Ross T. Dingman, and an entity created by Teeters and Dingman, Monarch Communities, LLC ("Monarch") (collectively "Defendants") in September, 2019. Brightview alleges Defendants unfairly competed with Brightview and misappropriated its trade secrets in violation of the Defend Trade Secrets Act of 2016 ("DTSA") and the Maryland Uniform Trade Secrets Act ("MUTSA"). ECF 38 ¶¶ 106-20, 129-35. Additionally, Brightview alleges that Teeters and Dingman "breached their fiduciary duties by usurping corporate opportunities" from Brightview. Id. ¶¶ 121-28, and engaged in a civil conspiracy, id. ¶¶ 136-39. Brightview now moves for summary judgment on Count I (misappropriation of trade secrets under the DTSA), Count II (misappropriation of trade secrets under the MUTSA), and Count IV (unfair competition). ECF 165. Defendants oppose Brightview's motion and filed a cross motion for partial summary judgment as to Brightview's claims for monetary damages for Counts I, II, and IV; its claims for exemplary damages and attorneys' fees under Counts I and II; and liability as to Count V (civil conspiracy). ECF 186. Defendant Monarch also separately moves for summary judgment on its liability as to Counts I and II. Id. The Court has considered the parties' motions, opposition filings, replies, and exhibits attached thereto. ECF 165; ECF 186; ECF 195; ECF 201. No hearing is necessary. See Loc. R. 105.6 (D. Md. 2018). For the reasons explained below, the Court will grant Brightview's motion in part as to Counts I, II, and IV, and deny Monarch's motion as to Counts I and II. The Court will also issue a permanent injunction in connection with the trade secret and unfair competition claims. Additionally, the Court will grant Defendants' motion as to the monetary and exemplary damages claims under Counts I and II, and deny their motion as to monetary damages under Count IV and attorneys' fees under Counts I and II. Finally, the Court will deny Defendants' motion as to Count V.

I. FACTUAL BACKGROUND

This is a dispute between an employer and its former employees who left to start their own competing enterprise. Many employees who move from one business to a competing venture bring to their new employer advantages they gained through their previous work experience. This case presents questions about what advantages are legally permissible, and what advantages violate the employees' legal duties and obligations of fair competition. Most of the material facts of the case are undisputed and were recounted in detailed fashion in the Court's previous opinion, Brightview v. Teeters, 441 F. Supp. 3d 115, 121-128 (D. Md. 2020). The most pertinent facts are set forth again below, with the addition of material facts learned during discovery.

A. The Creation of Monarch

Teeters and Dingman are former high-level employees at Brightview, a senior living facility developer and operator with several communities along the east coast. The last positions Teeters and Dingman held at Brightview were that of Senior Vice President of Development and Senior Vice President of Operations, respectively. ECF 38 at 1. In those roles, they had access to Brightview's financial and operational data as well as Brightview's plans for future development.

In the summer of 2018, Teeters and Dingman began discussions about leaving Brightview to start their own senior housing company with a former Brightview employee, Michael Glynn. See ECF 166-7 (emailing Glynn a "Conceptual Business Plan" on July 24, 2018); ECF 166-8 (responding to Teeters with other "assumptions" about the proposed plan on August 3, 2018); ECF 166-11 and 166-12 (discussing "a draft income statement" and "outlining a company structure" with Dingman and Glynn in August 2018). At the time, Glynn was working for a real estate development company, National Development. Matt Bay, another Brightview employee, was also privy to Teeters's, Dingman's, and Glynn's new "business plan." Teeters and Bay exchanged documents about the new project while they were both employed at Brightview. E.g., ECF 166-14 (emailing Teeters "additions to the business plan" on September 9, 2018).

On September 29, 2018, Teeters emailed Dingman and Glynn a "sample underwriting" for a hypothetical new senior living development project. ECF 166-13. The underwriting was created using Brightview's underwriting system, one of several materials Brightview claims as a protected trade secret in this case. Over the course of the next year, Teeters and Dingman continued creating their new senior living company while they were still employed at Brightview, downloading, disseminating to others, and using for their own purposes a variety of product development, market analysis, and site selection materials that Brightview claims are its trade secrets or proprietary and confidential information. For example, in January, 2019, Teeters sent a "Mid-Atlantic Market Opportunities" presentation, a document Brightview created as a result of a months-long effort to evaluate potential growth markets, to potential collaborators at National Development, ECF 166-27; ECF 166-140 ¶ 54, and in April, 2019 Teeters emailed Brightview's building plans to another potential Monarch investor. ECF 166-37. Sometimes Teeters and Dingman also convinced other Brightview employees to assist them in getting Brightview's information to use to evaluate futureopportunities for Monarch. See e.g., ECF 166-120 (email chain showing Dingman saying he would ask another Brightview employee to generate income band analyses for locations Dingman, Teeters, and Glynn were interested in pursuing and subsequently sending the analyses to Teeters and Glynn).

In the fall of 2018, Teeters, Dingman, and Glynn were already circulating their nascent business plan to a "high net worth network" of individuals, ECF 166-4. By early 2019, they began formally pitching their new venture to potential investors. See ECF 166-26 (discussing a January pitch meeting to National Development); ECF 166-28 (discussing a February pitch meeting with Sequoia Heritage). Bay also assisted in locating possible sources of capital for Monarch, while still employed at Brightview. E.g., ECF 166-32 (discussing contacts in the Southeast); ECF 166-35 (discussing contacts in Israel).

In April, 2019, Teeters, Dingman, and Glynn pitched their new venture to Mark Stebbins, CEO of PROCON, Inc., an architecture, engineering, and development firm. ECF 166-40 (thanking Stebbins for meeting with them and stating they were "thrilled with the possibility of partnering"). On April 22, 2019, Stebbins told them he was not ready to invest, stating in an email, "I think it is not profitable enough for me and I think I need a lot more detail." ECF 166-40. He also asked for "the example of the deal we discussed last week," and said he was "Happy to discuss further." Id. Glynn responded to Stebbins the same day writing, "[I] am attaching what [I] have of the sample underwriting we discussed last week" and sending a copy of an underwriting prepared using Brightview's model. Despite Stebbins's initial hesitancy, his negotiations with Teeters, Dingman, and Glynn continued. A few weeks after their initial meeting, on May 11, 2019, Glynn sent Stebbins "an updated term sheet," ECF 166-18, and by the end of June they were exchanging comprehensive drafts of an agreement to form a limited liability company that wouldprovide funding to their new venture. ECF 166-41 (sending a copy of the agreement to Stebbins on June 26, 2019, before getting a full "legal review" by an attorney).

While they were seeking capital investors, Teeters, Dingman, and Glynn were also working with a real estate development firm, Hogan Companies, to acquire real estate for their future senior living communities. See, e.g., ECF 166-57 (sharing a market study for a potential community location prepared by Hogan Companies with Dingman and Glynn in May, 2019); ECF 166-58 (exchanging an "assignment agreement" and "underlying contract" with Hogan Companies in June, 2019, and discussing plans to pursue multiple locations in Maryland). In his role as Vice President of Development for Brightview, Teeters was charged with identifying sites to develop Brightview communities and getting necessary jurisdictional approvals for these new projects. However, it appears that by the Spring of 2019, he was expending significant effort on achieving those tasks for his new business in some of the same market areas and was using not only his own expertise, but also Brightview materials, in the process. See, e.g., ECF 166-62 (using a Brightview community schematic design as a "placeholder" to obtain a special exception permit). From May to July, Teeters, Dingman, and Glynn explored the feasibility of acquiring various sites along the east coast. ECF 166-68 (exchanging demographic reports and market analyses). They submitted a letter of intent to purchase a site in Pasadena, Maryland, to Hogan Companies at the end of June. ECF 166-84. They also eventually negotiated a letter of intent to purchase a site in Montville, New Jersey, notwithstanding their knowledge that a Brightview developer, Dave Holland, was keenly interested in acquiring the site for Brightview. See ECF 166-77 (telling Dingman and Teeters that Holland was "hot on this" in reference to the Montville site); ECF 166-80. On July 10, 2019, they officially formed Monarch Communities LLC as a registered organization in Delaware. ECF 166-90.

Meanwhile, Teeters and Dingman had not communicated to Brightview their plans to leave and start a new competing business. Dingman first gave Brightview notice of his planned departure on July 22, 2019, but agreed to remain...