Hctec Partners, LLC v. Crawford

676 S.W.3d 619

HCTEC PARTNERS, LLC

v.James Prescott CRAWFORD et al.

No. M2020-01373-COA-R3-CV

Court of Appeals of Tennessee, Middle Section, AT NASHVILLE.

September 8, 2021 Session

FILED February 24, 2022

Permission to Appeal filed with the Tennessee Supreme Court April 22, 2022

John T. Baxter and Woods Drinkwater, Nashville, Tennessee, and Erika C. Birg, Atlanta, Georgia, for the appellants, James Prescott Crawford and The Rezult Group, Inc.

David L. Johnson, Taylor B. Mayes, and Elizabeth Moreton, Nashville, Tennessee, for the appellee, HCTEC Partners, LLC.

Kristi M. Davis, J., delivered the opinion of the Court, in which Frank G. Clement, Jr., P.J., M.S., and Andy D. Bennett, J., joined.

OPINION

Kristi M. Davis, J.

In 2012, plaintiff HCTec Partners, LLC ("HCTec") and James Prescott Crawford ("Crawford") entered into an employment agreement under which Crawford was prohibited from disclosing any of HCTec's confidential information and competing with HCTec for one year after Crawford's employment with HCTec ended. When Crawford left HCTec to work for a competitor in 2019, HCTec sought to enforce the agreement. HCTec sued Crawford for breach of contract and sued Crawford's new employer, The Rezult Group, Inc. ("Rezult"), for inducement of breach pursuant to Tennessee Code Annotated section 47-50-109. After extensive discovery, HCTec moved for summary judgment as to both claims, which the trial court granted. Discerning no error, we affirm the trial court's decision in all respects.

BACKGROUND

This case arises from a dispute over a non-compete and non-disclosure agreement executed by HCTec and Crawford in 2012. HCTec is a staffing company located in Brentwood, Tennessee, that sources healthcare information technology ("HIT") personnel and places them with hospitals and hospital systems across the country. It is undisputed that HIT recruitment is a competitive industry. Crawford was originally hired as a recruiter "to source, screen, submit and place candidates for HIT positions." Prior to 2012, Crawford managed a Smoothie King and occasionally helped with his brother-in-law's construction business. When hired by HCTec, Crawford signed a "Confidentiality, Non-Competition, and Non-Solicitation Agreement" (the "Agreement"), which provides as pertinent:

Except as required to perform Employee's job duties at the Company, Employee agrees not to Use or disclose any Trade Secrets of the Company during Employee's employment at the Company, or at any time after the termination of Employee's employment at the Company for any reason, or prior to such time as they cease to be Trade Secrets through no intentional or negligent act or failure to act by me in violation of this Agreement or otherwise.

To prevent Employee from unfairly taking advantage of the knowledge and opportunities gained while in the Company's employ, or to profit at the expense of the Company, during Employee's employment with the Company or the 1 (one) year period following the termination of Employee's employment for any reason, whether by discharge or resignation or on account of relocation, or any other reason, Employee agrees not to compete with the Company in the U.S. directly or indirectly, individually or as a partner, agent, proprietor, director, officer, independent contractor, advisor, salesperson, sales manager, sales trainer, consultant, member, stockholder, or employee of any other person, firm, limited liability company, partnership, corporation, or other Competing Business (as that term is defined in Section 4)[.]

* * *

The parties agree that in the event it becomes necessary to seek judicial remedies for the breach or threatened breach of this Agreement, the prevailing party will be entitled, in addition to all other remedies, to recover from the non-prevailing party all costs of such judicial action, including but not limited to, reasonable attorneys’ fees and costs and paralegals’ fees, together with all such expenses related to any appeal.

At the time of hiring, HCTec provided Crawford with a week of classroom training regarding HIT recruiting best practices, the HIT market overall, resume review, candidate screening, and rate negotiation. By all accounts Crawford performed exceptionally and was promoted to Recruiting Team Lead in 2016 and then to Recruiting Manager in 2017. Eventually, Crawford became Interim HIT Recruiting Delivery Manager and later the permanent HIT Recruiting Delivery Manager. As Delivery Manager, Crawford was responsible for and oversaw the recruiting team's "production, training, mentoring, coaching, hiring [and] firing." Crawford reported on his team's progress during weekly meetings with HCTec executives. The primary software that HCTec used to compile data and pay history about its consultants¹ and customers, TalentRover , was used by Crawford daily. Crawford described himself as a "super user" of TalentRover on his resume and testified in deposition that he was HCTec's "point person" on the database. HCTec provided Crawford with training on how to use TalentRover and numerous other platforms by bringing in outside representatives from those companies. Crawford agreed in his deposition that while commercially available to other users, TalentRover was configured specifically for HCTec and that the data as compiled in TalentRover was confidential and proprietary to HCTec.

In June of 2019, a headhunter reached out to Crawford about an opportunity with Rezult, another staffing company located in Brentwood. It is undisputed that Rezult's office is in the same general area as HCTec's office. Rezult met with Crawford and eventually offered him the position of Director, Healthcare IT Division. Although Rezult is also a staffing company, they recruit personnel for industries outside of HIT² such as accounting and finance. According to both Crawford and Rezult, Crawford's duties at Rezult entailed growing the HIT recruiting team to perform at the level of Rezult's other recruiting divisions. Crawford's understanding was that the only difference in his job at Rezult was that he would also oversee a sales team in addition to recruiters, a role he did not perform at HCTec. Crawford notified HCTec in early August 2019 that he would be going to work for Rezult but agreed to stay at HCTec through the end of August. Although Rezult knew Crawford was subject to the Agreement, Rezult's CEO, John Carrico, testified that he did not review the Agreement nor seek advice of counsel prior to offering Crawford the position. Crawford would later testify that he did not understand the Agreement to apply to him any longer insofar as Crawford was not in a "production role," meaning Crawford did not maintain valuable relationships with clients and consultants. Nonetheless, when questioned by HCTec's CEO, Bill Grana, Crawford admitted that Rezult's HIT recruiting group would be in direct competition with HCTec.

Upon learning of Crawford's departure, Mr. Grana raised concerns about Crawford's role at Rezult. Emails contained in the record show that Mr. Grana and HCTec's chief human resources officer, Brandyn Payne, communicated with Rezult and Crawford about the Agreement. HCTec never took the position that Crawford could not work for Rezult in any capacity but maintained that Crawford could not compete directly with HCTec for the term of the Agreement, which was one year. Ms. Payne invited Crawford and Rezult to collaborate with her and Mr. Grana on developing guidelines for Crawford's work so that he could be employed by Rezult but also comply with the Agreement. Rezult contended, however, that because Crawford's role would not be "outward facing," there could be no damage to HCTec. In response to a letter sent to Rezult by counsel for HCTec, Rezult described its position as follows:

Mr. Crawford is fulfilling an internal role at Rezult. He will not be outwardly facing with customers, consultants, or permanent employees. Instead, he is building and leading Rezult's Healthcare IT group. His job duties include working with senior leadership to determine the Healthcare IT group's strategy as well as the needs and management of the group internally. Mr. Crawford does not have and will not have any role in soliciting customers, consultants, or permanent employees (including, of course, any HCTec-connected individuals), and will instead focus on learning and executing Rezult's own policies and practices.

Mr. Crawford's and Rezult's intentions to ensure that there is no unfair competition are demonstrated by the facts that Mr. Crawford did not take any HCTec property and both he and Rezult have been very candid and open with HCTec about Mr. Crawford's new role.

Crawford's first day with Rezult was September 3, 2019. HCTec informed Rezult that it would seek judicial remedies pursuant to the Agreement unless Rezult ceased and desisted employment of Crawford in any role involving HIT staffing. The parties could not agree, however, and HCTec filed its verified complaint in the Chancery Court for Williamson County (the "trial court") on September 12, 2019. HCTec alleged breach of contract as to Crawford and inducement of breach as to Rezult and requested compensatory damages as well as injunctive relief. HCTec alleged in its complaint that Crawford had intimate knowledge of and access to its financial information, client lists, confidential strategies, network of HIT professionals, national market data, budgets and forecasts, targets and strategic goals, and key operating objectives and workplans.

It is undisputed that HCTec contributed to training Crawford, including the week of classroom training upon his initial hire, attendance at an exclusive HIT recruitment training at Belmont, and a leadership conference in Chicago. Crawford also admitted in deposition that he spent a significant amount of time with Bobby Knight, HCTec's Senior Vice President of Strategic Staffing, as well as other various executives, who trained and mentored Crawford on a daily basis. HCTec...