F.S. Sperry Co. v. Schopmann

304 F.Supp.3d 694

F.S. SPERRY CO., INC., Plaintiff,

v.Daniel SCHOPMANN, et al., Defendants.

No.: 3:17–CV–102–TAV–HBG

United States District Court, E.D. Tennessee.

Filed January 19, 2018

Brigham Alexander Dixson, North, Pursell & Ramos, P.L.C., Joshua D. Wilson, R. Douglas Hanson, R. Eddie Wayland, King & Ballow, Nashville, TN, J. Chadwick Hatmaker, Woolf, McClane, Bright, Allen & Carpenter, PLLC, Knoxville, TN, for Plaintiff.

John E. Winters, Bryce Ellsworth Fitzgerald, Kramer, Rayson LLP, Knoxville, TN, for Defendants.

MEMORANDUM OPINION

Thomas A. Varlan, CHIEF UNITED STATES DISTRICT JUDGE

This civil action is before the Court on plaintiff's Motion for Temporary Restraining Order and Preliminary Injunction [Doc. 10]. Plaintiff requests injunctive relief related to defendant Revolution Industrial Group's ("RIG") refractory business. The parties appeared before the Court for oral argument on July 12, 2017, at which time they presented argument and offered evidence related to the issues addressed in plaintiff's motion. For the reasons explained below, the Court will grant in part and deny in part plaintiff's motion for injunctive relief.

I. Background

Plaintiff is a refractory contractor, and defendants Daniel Schopmann, Ronald Meadows, and Jeremy Roach worked for plaintiff at its Knoxville office. All three of these individuals simultaneously resigned from their employment with plaintiff on February 21, 2017, and went to work for defendant RIG. RIG performs several different services, including refractory services like those plaintiff offers. Plaintiff brought this action on March 23, 2017, alleging that Schopmann, Meadows, and Roach utilized plaintiff's proprietary information to prepare a business forecast for RIG. Plaintiff further alleges that these individuals later used the same proprietary information to solicit plaintiff's customers, employees, and vendors.

While at RIG, Schopmann worked for plaintiff as a Branch Manager, Meadows worked for plaintiff as a Sales Manager, and Roach worked for plaintiff as a Construction Manager. To obtain their positions, Schopmann and Meadows executed Non–Competition, Non–Solicitation, and Non–Disclosure Agreements (collectively, the "Agreements"). Since commencing this action, plaintiff has been unable to locate a similar agreement for Roach. These Agreements prohibit defendants from competing directly or indirectly with plaintiff and from soliciting or offering employment to plaintiff's employees [See Docs. 1–1, 1–2]. At RIG, Schopmann was initially the Chief Executive Officer, but he changed his title to "Executive VP of Mechanical" after plaintiff initiated this action. Meadows was RIG's Director of Operations, but subsequently changed his title to "Director of Operations–Mechanical." Roach is RIG's "Refractory Construction Manager."

RIG was registered as an LLC on January 11, 2017, which was over a month before Schopmann, Meadows, and Roach resigned from plaintiff's employment no February 21, 2017. As RIG is currently structured, it consists of two separate divisions, a Refractory Division that does work like that performed by plaintiff, and a Mechanical Division that performs Certified Mechanical Contractor ("CMC") services.

Plaintiff initially requested that the Court enjoin defendants from the following:

1. engaging in further conduct that would constitute the same or similar violations as alleged in plaintiff's causes of action;

2. continuing defendants' misappropriation of plaintiff's trade secret[s], confidential information, and proprietary information;

3. using or disclosing any of plaintiff's trade secrets, confidential information, or proprietary information;

4. contacting any of plaintiff's vendors, customers, independent contractors, or consultants regarding plaintiff's business relationship with that person or entity; and

5. attempting to delete, modify, alter, or otherwise destroy any potentially discoverable or relevant electronic information.

[Doc. 1 p. 72]. In response, defendants have agreed to limited injunctive relief.¹ Specifically, defendants are willing to submit to the following injunctive relief:

1. defendants Schopmann and Meadows are willing to be enjoined for a period of two years from competing directly or indirectly with plaintiff in the State of Tennessee or any adjacent state in the fields of refractory, insulation, and corrosion-resistant masonry installation and contracting, as well as refractory, insulation, and corrosion-resistant material sales;

2. defendants Schopmann and Meadows are willing to be enjoined for a period of two years from soliciting, offering employment to, otherwise attempting to hire or retain, or assisting in the hiring or retention of any of plaintiff's employees, independent contractors, or consultants;

3. defendants Schopmann and Meadows are willing to be enjoined for a period of two years from encouraging, inducing, or assisting others in inducing any person or entity to terminate his, her, or its employment, contract, independent-contractor relationship or consulting relationship with plaintiff, or in any way interfering with any such relationship;4. defendants Schopmann and Meadows are willing to be enjoined for a period of two years from calling on, soliciting, interfering with, or accepting business from plaintiff's customers, with respect to refractory work only;

5. defendants Schopmann and Meadows are willing to be enjoined for a period of two years from calling on, soliciting, or interfering with any efforts of plaintiff concerning any customer or prospective customer, with respect to refractory work only;

6. all defendants agree to be enjoined from encouraging, inducing, or assisting others in inducing any person or entity who is a vendor or supplier of plaintiff to terminate his, her, or its contact or relationship with plaintiff, or interfering with any such relationship; and

7. all defendants agree to be enjoined from using, exploiting, or disseminating to third-parties plaintiff's confidential, proprietary, and customer-related information.

[Doc. 39 pp. 5–6]. Thus, the primary issues left for the Court to resolve are whether defendants may still compete directly or indirectly with plaintiff in fields adjacent to refractory work, and whether RIG and Roach may still compete with plaintiff in the refractory business [Doc. 39 p. 6].²

II. Standard of Review

Under Federal Rule of Civil Procedure 65, a party may seek injunctive relief if it believes it will suffer irreparable harm or injury during the pendency of the action. A temporary restraining order "is meant to preserve the status quo until a court can make a reasoned resolution of a dispute." Black v. Cincinnati Fin. Corp. , No. 1:11-cv-210, 2011 WL 1640962, at *1 (S.D. Ohio May 2, 2011) (citing Procter & Gamble Co. v. Bankers Tr. Co. , 78 F.3d 219, 226 (6th Cir. 1996) ). A temporary restraining order is of short duration and may be issued without notice to the adverse party. Id. (citing Workman v. Bredesen , 486 F.3d 896, 922 (6th Cir. 2007) ); see also Fed. R. Civ. P. 65(b). If a defendant is on notice, however, a request for a temporary restraining order may be treated as a motion for a preliminary injunction. Fed. R. Civ. P. 65(a)(1).

In determining whether to grant a plaintiff's request for injunctive relief, the Court must consider four factors: (1) whether the movant would suffer irreparable harm without the injunction; (2) whether issuance of the injunction would cause substantial harm to others; (3) whether the public interest would be served by the issuance of the injunction; and (4) whether the movant has demonstrated a strong likelihood of success on the merits. Overstreet v. Lexington–Fayette Urban Cty. Gov't , 305 F.3d 566, 573 (6th Cir. 2002) ; Tumblebus, Inc. v. Cranmer , 399 F.3d 754, 760 (6th Cir. 2005). These factors are "not prerequisites that must be met," but rather considerations the Court must balance. Certified Restoration Dry Cleaning Network, L.L.C. v. Tenke Corp. , 511 F.3d 535, 542 (6th Cir. 2007).

Because a preliminary injunction is "an extraordinary remedy never awarded as of right," the Court must carefully consider the scope of the plaintiff's request and award injunctive relief only upon a clear showing that plaintiff is entitled to such relief. Winter v. Nat. Res. Def. Council , 555 U.S. 7, 20, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008). The movant must "carry his or her burden of proving that the circumstances clearly demand it." Overstreet , 305 F.3d at 573.

III. Analysis

The two issues remaining before the Court are whether Roach should be enjoined from working in RIG's Refractory Division and whether RIG should be enjoined from performing refractory services. Plaintiff asserts six claims against defendants: breach of contract, inducement of breach of contract, intentional interference with business relationships, breach of the duty of loyalty, civil conspiracy, and vicarious liability. The Court will first assess the likelihood of success on the merits of each claim against Roach and RIG. In assessing the likelihood of success on the merits against defendants, the Court will focus its attention on the most relevant claims against Roach and RIG specifically. The Court will then consider whether plaintiff will suffer irreparable harm without the injunction, whether issuance of the injunction will cause substantial harm to others, and whether issuance of the injunction will serve the public interest.

A. Likelihood of Success on the Merits

The preliminary injunction has a limited purpose, which is "to preserve the relative positions of the parties until a trial on the merits can be held." Univ. of Tex. v. Camenisch , 451 U.S. 390, 395, 101 S.Ct. 1830, 68 L.Ed.2d 175 (1981). A party "is not required to prove his case in full at a preliminary injunction hearing." Id. However, "a plaintiff must show more than a mere possibility of success." Six Clinics Holding Corp. v. Cafcomp Sys., Inc. , 119 F.3d 393, 402 (6th Cir. 1997). The Court must...