Henkel of Am., Inc. v. Craig M. Bell & Knight Capital Partners Corp.

HENKEL OF AMERICA, INC., Plaintiff, v. CRAIG M. BELL and KNIGHT CAPITAL PARTNERS CORP., Defendants.

Case Number 17-13909

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION

December 17, 2018

Honorable David M. Lawson

OPINION AND ORDER GRANTING MOTION FOR SUMMARY JUDGMENT

Defendant Craig Bell was employed in upper management by Henkel Corporation (Henkel US) until he left that job to work for defendant Knight Capital Partners. Henkel US's parent, plaintiff Henkel of America, Inc., says that Bell breached certain non-compete and non-disclosure clauses in his employment contract with Henkel US, claims that it is a co-party to that contract, and seeks to recoup the salary and benefits Henkel US paid to Bell. Plaintiff Henkel America also accuses Knight of tortiously interfering with Bell's employment contract with Henkel US and aiding Bell in breaching his employment contract. The defendants have moved for summary judgment of dismissal of all nine counts of the complaint save one: Count V, alleging that Bell breached a fiduciary duty. On most of the counts of the complaint, Henkel America has not presented evidence that Bell breached his employment contract, and on the remaining counts it has not shown that it suffered damages caused by the defendants' conduct. The Court will grant the motion for summary judgment and dismiss the complaint except for count V, which has not been addressed by the parties.

I. Facts and Proceedings

It is fair to say that this lawsuit is an outgrowth of an action that Knight brought against Henkel America's (and Henkel US's) German parent corporation, Henkel AG & Co., KGaA (Henkel Germany), for scuttling a joint venture Knight was negotiating with Henkel US to develop and market products using technology that Knight said it controlled. Before those negotiations imploded in the summer of 2015, Bell left Henkel US and took a job with Knight. The Court dismissed the earlier case, Knight Capital Partners Corp. v. Henkel AG & Co., KGaA, No. 16-12022, 2018 WL 4931990 (E.D. Mich. Oct. 11, 2018), but not before Henkel America filed this virtual countersuit.

Henkel America accuses Bell in this case of secretly moonlighting with Knight before he formally left Henkel US at the end of 2014, which allegedly violated certain provisions of Bell's employment contract to Henkel America's disadvantage. The facts, as the parties present them, do not support those claims.

A. Background

The underlying context of the dispute is familiar to the parties and was discussed at length in the Court's opinion granting Henkel's motion for summary judgment in the related case. Knight Capital Partners, 2018 WL 4931990 at *1-3. A shorter version is that in February 2014, Knight held a global license granted to it by AI Sealing, LLC (AIS), a Texas company that purported to possess the patent rights for a "revolutionary" series of citrus-based compounds developed for cleaning dirty equipment at oil rigs and refineries. Knight approached Henkel US to explore the possibility of a deal for marketing and distributing products based on the new technology. In an attempt to reach a deal, the parties engaged in lengthy negotiations, which persisted over several months. Beforehand, however, Henkel US and Knight entered into a non-disclosure agreement.The negotiations eventually broke down, and subsequently Knight sued Henkel US's prime global parent — Henkel Germany — for tortious interference in the scuttled deal with Henkel US. However, discovery in the case did not bear out Knight's allegations that Henkel Germany had exploited the negotiations for its own economic advantage, principally because the proofs offered no support for the plaintiff's claim that Henkel had exploited the relationship to circumvent Knight and procure a licensing deal directly with its technology holder, AIS.

B. Craig Bell's Employment with Henkel

Bell worked for Henkel US, a subsidiary entity wholly owned by Henkel of America, Inc., for 22 years, rising to the rank of Vice President of Henkel US's Adhesive Technology division. When he was promoted to the position of Vice President at Henkel US in September 2010, Bell signed an employment contract that included several provisions governing his conduct; among them were nondisclosure and noncompetition clauses. The offer letter that Bell counter-signed stated that his employment would be "at will," meaning "you, or the Company can terminate your employment at any time for any reason or no reason."

By signing the "Non-Solicitation & Non-Competition Agreement," Bell agreed that during his employment by Henkel US and for 12 months after it ended he would not be employed by any "Competitive Entity," which was defined to mean "any business which manufactures, produces, sells or markets products or services that are competitive with any Henkel products, services and/or business: (i) that you worked with, sold, developed, marketed or handled; (ii) about which you had access to trade secrets or confidential information; or (iii) for which you provided shared services support, at any time during the last 24 months of your employment."

Under a separate "Non-Disclosure & Invention Assignment Agreement," Bell agreed "to use [his] best efforts during [his] employment with [Henkel] and to not engage in outsideemployment or business interests that detract from [his] performance for [Henkel], or that create an actual or potential conflict of interest." Bell also agreed that during and after his employment he would not "directly or indirectly [] disclose, utilize, or authorize any disclosure of Confidential Information," which was exhaustively enumerated as comprising:

(i) customer lists, vendor information, and customer information as compiled by [Henkel], including, but not limited to, contacts, preferences, orders, product usage, product volumes, pricing, promotions, sale and contract terms, and contract expiration dates; (ii) internal practices and procedures, compensation and payroll information, personnel data, and recruitment activities; (iii) financial condition and financial results of operations; (iv) supply of materials information, including sources and costs; (v) information relating to designs, formula, development or experimental work, know-how, products, processes, computer programs, source codes, data bases, schematics, inventions, creations, original works of authorship, or other subject matter relating to research and development, strategic planning, manufacturing, engineering, purchasing, finance, marketing, promotion, distribution, licensing, and selling activities; and (vi) any and all information, without regard to form, having independent economic value to [Henkel] that is not generally known to, and not readily ascertainable by proper means by a person who can obtain economic value from its disclosure or use.

Although Bell worked for Henkel US, both the nondisclosure and noncompetition agreements stated that they were "entered into by and between Henkel of America, Inc. and each of its subsidiaries, divisions, associated or affiliated companies [and] Craig Bell."

C. The Henkel — Knight Negotiations

Bell was friends with Knight's CEO, Fadi Nona. In late 2013 he introduced Nona to principals at Henkel US with the hope of generating a deal between the two companies to develop the refinery cleaning products. As the negotiations progressed, Bell also "coached" Nona on the best means of presenting and advancing the deal through Henkel's corporate hierarchy, which as a sales executive was a function that he often performed when seeking to broker a deal with an outside partner. It is undisputed that Bell's relationship and activities with Nona were well known among Bell's Henkel colleagues.

Bell attested that he had been specifically trained by consultants Henkel engaged to provide this sort of "facilitation" for negotiations with potential business partners. He said that offering services such as "editing [Knight]'s email communication [and] providing guidance regarding how to best communicate with Henkel's leadership team" were things he was taught to do and understood were appropriate in his role as a Henkel executive. However, Bell asserts that he was not involved as a direct advocate for Knight in the negotiations until after he left Henkel US's employment. He contends that nearly all of his time during most of the negotiations was consumed by a hectic schedule managing numerous other products within his purview, which required, among other things, 39 trips to domestic and global Henkel locations during 2014, and supervision of 16 members of the team of senior managers who reported to him. Those points are unrebutted as well.

Bell also worked extensively to facilitate the transition of his duties after he gave Henkel notice of his resignation on November 4, 2014. His last day of work was January 5, 2015.

On the same day that Bell gave his notice, Henkel US's VP of Marketing, Mike Quail, circulated an email to a handful of Henkel executives in which he relayed his understanding of why Bell had tendered his resignation:

[Craig is leaving to go to work for a company] owned by his personal friend, [which is] the venture capital group who has invested in the cleaner (refinery) that MRO is looking at. Craig connected the opportunity to represent the technology to Ken and Zubin for MRO. His friend knows nothing about the chemical industry, so [he] hired Craig to manage this particular venture for his company, with or without Henkel's involvement. Don't know . . . don't think that this is a compliance issue.

Bell attested that he never received any negative commentary or reprimands throughout his last year. He says that he was commended for his exemplary performance, which included initiating and completing several major projects in his division and closing a deal with an outside partner (not Knight) with projected sales of $35 million in the first two years — according to Bell,the...