Brow Art Mgmt. v. Idol Eyes Franchise, LLC

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BROW ART MANAGEMENT, LLC, Plaintiff, v. IDOL EYES FRANCHISE, LLC et al., Defendants.

CIVIL No. 23-11434

United States District Court, E.D. Michigan, Southern Division

July 20, 2023

Honorable Linda V. Parker

OPINION AND ORDER GRANTING IN PART AND DENYING IN PART MOTION FOR TEMPORARY RESTRAINING ORDER AND PRELIMINARY INJUNCTION

LINDA V. PARKER, U.S. DISTRICT JUDGE

This is a diversity action arising from former employees purported breaches of restrictive covenants in their employment contracts with Plaintiff regarding eyebrow threading services. Plaintiff also seeks relief against the former employees' new employer for alleged torts regarding the same contracts. The matter is presently before the Court on “Plaintiff's Ex-Parte Motion for Temporary Restraining Order and Preliminary Injunction.” (ECF No 3.) The motion is fully briefed, ECF Nos. 7, 10, and on July 11, 2023, the Court held a hearing on the present motion. For the following reasons, the Court grants the motion in part and enters preliminary injunction.

BACKGROUND & PROCEDURAL HISTORY

Plaintiff Brow Art Management, LLC, (“Plaintiff”) is a direct provider and franchisor of beauty and skincare services, including eyebrow threading. Plaintiff also maintains a uniform business model, which uses specially designed operations and equipment. Defendants Anas Sullaka Lina Hirmuz, and Manal Hassan (collectively, “Defendant Employees”) were employed by Plaintiff as Eyebrow Threaders.

Nondisclosure/Non-Competition Agreements

In 2011, Defendant Hassan executed a nondisclosure and non-competition agreement with Perfect Brow Florida, Inc. (“PBF”), when she was originally hired by PBF. (Hassan Agreement, Ex. 1, ECF No. 1-1.) The same year Defendant Hirmuz executed a similar agreement with PBF to work as an Eyebrow Threader. (Hirmuz Agreement, Ex. 2, ECF No. 1-2.) On June 23, 2015, Defendant Sullaka executed a nondisclosure and non-competition agreement with Perfect Brow Art, Inc. (“PBA”) in connection with her employment as an Eyebrow Threader. (Sullaka Agreement, Ex. 3 ECF No. 1-3.) PBF and PBA also conducted business under the name “Brow Art 23.”

Paragraph 1 of the Agreements with Defendant Employees, titled “Trade Secrets and Confidential Information,” states, in relevant part:

a) In this Agreement, “Trade Secret” is information related to or used in Brow Art 23's business or operation and that is not commonly known by or available to the public. The information covers but is not limited to techniques, technical or non-technical data, formulas, patters, compilations, programs, devices, methods, drawings, processes, financial data, financial plans, product plans, passwords, or lists of actual or potential customers or suppliers. This information is that which Brow Art 23 (i) derives (actual or potential) economic value or that through which other persons can obtain economic value from its disclosure or use; and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

b) In this Agreement, “Confidential Information” is technical and non-technical information used in or related to Brow Art 23's business that is not commonly known by or available to the public, including, without limitation, Trade Secrets and information contained in any employee manual, training guides and materials, banking information, customer lists, leasing information, rental space information, and franchising information. In addition, any other information identified as confidential when delivered by Brow Art 23 to Employee shall be deemed Confidential Information ....

c) Any information expressly designed by Brow Art 23 as “Trade Secrets” or “Confidential Information” shall be deemed such for all purposes of this Agreement, but the absence of designation shall not relieve Employee of his or her obligations hereunder in respect of information otherwise constituting Trade Secrets or Confidential Information. Employee understands that Brow Art 23 is providing access to its Trade Secrets and other Confidential Information, which creates a relationship of confidence and trust between Employee and Brow Art 23 with respect to the Trade Secrets and other Confidential Information.

(ECF No. 1-1 ¶ 1, Pg ID 51; ECF No. 1-2 ¶ 1, Pg ID 57; ECF No. 1-3 ¶ 1, Pg ID 63.) Paragraph 2 of the Agreements, titled Confidentiality/Non-Disclosure,” states:

a) Employee shall not communicate or divulge to (or use for the benefit of) any other person, firm, association, or corporation, with the sole exception of Brow Art 23, now or at any time in the future, any Trade Secrets or other Confidential Information. At any time from the date of this Agreement, Employee must take all steps reasonably necessary and/or requested by Brow Art 23 to ensure that the Confidential Information and Trade Secrets are kept confidential pursuant to the terms of this Agreement. Employee must comply with all applicable policies, procedures and practices that Brow Art 23 has established and may establish from time to time with regard to the Confidential Information and Trade Secrets.

b) Employee's obligations in paragraph 2(a) above shall continue after Employee is no longer employed by Brow Art 23, regardless of the reason or reasons for termination, and whether such termination is voluntary or involuntary, and Brow Art 23 is entitled to communicate Employee's obligations under this Agreement to any future customer or employer to the extent deemed necessary by Brow Art 23 for protection of its rights hereunder and regardless of whether Employee or any of its affiliates or assigns becomes an investor, partner, joint venturer, broker, distributor, or the like in any similarly competitive business.

(ECF No. 1-1 ¶ 2, Pg ID 51-52; ECF No. 1-2 ¶ 2, Pg ID 57-58; ECF No. 1-3 ¶ 2, Pg ID 63-64.) Paragraph 3, titled “Non-Competition,” states:

a) During the term of Employee's relationship with Brow Art 23 and for a period of eighteen (18) months after Employee is no longer employed by Brow Art 23, regardless of the cause of expiration or termination, Employee shall not, directly or indirectly, for themselves or through, on behalf of or in conjunction with, any person, persons, partnership, corporation, limited liability company or other business entity, divert or attempt to divert any business or customer of Brow Art 23 to any Competitive Business, by direct or indirect inducement or otherwise, or do or perform, directly or indirectly, any other act injurious or prejudicial to Brow Art 23 or its trademark “Brow Art 23” and such other trade names, trademarks, service marks, trade dress, designs, graphics, logos, emblems, insignia, fascia, slogans, drawings and other commercial symbols as Brow Art 23 designates to be used in connection with Brow Art 23's business.

b) During the term of Employee's relationship with Brow Art 23 and for a period of eighteen (18) months thereafter, regardless of the cause of termination, Employee shall not, directly or indirectly, for themselves or through, on behalf of or in conjunction with, any person, persons, partnership, corporation, limited liability company or other business entity, carry on, be engaged in or take part in, render services to, or own or share in the earnings of any Competitive Business within a twenty-five (25) miles radius of any location where Brow Art 23 conducts or operates its business without express written consent of Brow Art 23.

c) During the term of Employee's relationship with Brow Art 23 and for a period of eighteen (18) months thereafter, regardless of the cause of termination, Employee shall not, directly or indirectly, solicit or otherwise attempt to induce or influence any employee or other business associate of Brow Art 23 to compete against, or terminate or modify his, her or its employment or business relationship with, Brow Art 23.

(ECF No. 1-1 ¶ 3, Pg ID 52; ECF No. 1-2 ¶ 3, Pg ID 58; ECF No. 1-3 ¶ 2, Pg ID 64.)

Oakland Mall Location

On April 30, 2013, Perfect Brow Oakland, Inc., (“PBO”) which is an affiliate of PBF and PBA, entered into a lease agreement to lease a kiosk located in Oakland Mall at 412 W. 14 Mile Road, Troy, MI 48083. Upon execution of the Agreements, Defendant Employees began working at this location.

Asset Purchase Agreement

On July 30, 2019, Plaintiff entered into an Asset Purchase Agreement (“Purchase Agreement”) with PBA, PBF, PBO, and other affiliates (“Seller Entities”). (Ex. 4, ECF No. 1-4.) Pursuant to the Purchase Agreement, Plaintiff purchased all of the rights, title, and interest in the Seller Entities' assets.^[1]According to Plaintiff, the purchased assets included “all of the Seller Entities' customer records and certain assumed contracts and leases, including without limitation, the Oakland Lease for the Oakland Kiosk Location.” (ECF No. 1 ¶ 36, Pg ID 15 (emphasis added); ECF No. 1-6 at Pg ID 97.) On September 10, 2019, the U.S. Bankruptcy Court for the Northern District of Illinois entered an order approving the Purchase Agreement between Plaintiff and Seller Entities. (ECF No. 1-6 at Pg ID 68-83.)

Defendants' Alleged Violations

In September of 2019, Plaintiff assumed the Oakland Kiosk location pursuant to terms of the Purchase Agreement that included the Oakland Lease Agreement, which was set to expire on May 31, 2023. Defendant Employees remained employed with Plaintiff. On March 12, 2023, Neha D. Matiwala, a Regional Manager for Plaintiff, checked the video camera footage of the Oakland Kiosk location from March 11. Ms. Matiwala noticed a man who was later identified as Mario Kiezi-the Owner of Oakland Mall-speaking with Defendant Employees and showing them images from his phone. After a conference between Defendant Employees, along with Ms. Matiwala, Khalida Safi, Plaintiff's...