Presidio, Inc. v. People Driven Tech., Inc.

686 F.Supp.3d 652

PRESIDIO, INC., et al., Plaintiffs, v. PEOPLE DRIVEN TECHNOLOGY, INC., et al., Defendants.

Case No. 2:21-cv-05779

Case No. 2:22-cv-03838

United States District Court, S.D. Ohio, Eastern Division

Signed August 11, 2023

Danielle Vrabie, Pro Hac Vice, Joshua Isaac Schlenger, Pro Hac Vice, Kaitlyn Alisa Zacharias, Pro Hac Vice, Katherine Boy Skipsey, Pro Hac Vice, Meghan Stuer, Pro Hac Vice, Robert S. Friedman, Pro Hac Vice, Shin Young Hahn, Pro Hac Vice, Sheppard Mullin Richter & Hampton LLP, New York, NY, Lindsay Kristine Gerdes, Dinsmore & Shohl, Cincinnati, OH, D. Michael Crites, Joseph Kendall Merical, Dinsmore & Shohl, LLP, Columbus, OH, for Plaintiffs in No. 2:21-cv-05779.

Lindsay Kristine Gerdes, Dinsmore & Shohl, Cincinnati, OH, D. Michael Crites, Joseph Kendall Merical, Dinsmore & Shohl, LLP, Columbus, OH, Joshua Isaac Schlenger, Pro Hac Vice, Katherine Boy

Skipsey, Pro Hac Vice, Meghan Stuer, Pro Hac Vice, Robert S. Friedman, Pro Hac Vice, Shin Young Hahn, Pro Hac Vice, Sheppard Mullin Richter & Hampton LLP, New York, NY, Kevin Michael Cloutier, Pro Hac Vice, Sheppard Mullin Richter & Hampton LLP, Chicago, IL, for Plaintiffs in No. 2:22-cv-03838.

David Michael DeVillers, Jeffrey Adam Bartolozzi, William A. Nolan, Barnes & Thornburg LLP, Columbus, OH, Amanda Rauh-Bieri, Pro Hac Vice, D. Andrew Portinga, Pro Hac Vice, James R. Peterson, Pro Hac Vice, Miller Johnson, Grand Rapids, MI, for Defendant People Driven Technology, Inc. in No. 2:21-cv-05779.

David L. VanSlyke, Daniel J. Hurley, Plunkett Cooney, Columbus, OH, Evan Caleb Ecos, John F. Marsh, Columbus, OH, David Michael DeVillers, Barnes & Thornburg LLP, Columbus, OH, Patrick Charles Lannen, Pro Hac Vice, John Robert Stevenson, Pro Hac Vice, Plunkett Cooney, Bloomfield Hills, MI, for Defendant Joseph Schaumleffel in No. 2:21-cv-05779.

Patrick Charles Lannen, Pro Hac Vice, John Robert Stevenson, Pro Hac Vice, Plunkett Cooney, Bloomfield Hills, MI, Daniel J. Hurley, David L. VanSlyke, Plunkett Cooney, Columbus, OH, David Michael DeVillers, Barnes & Thornburg LLP, Columbus, OH, Edward Reilley Forman, Helen M. Robinson, Samuel Micah Schlein, John Spenceley Marshall, Madeline Jean Rettig, Marshall and Forman, LLC, Columbus, OH, for Defendant Thomas Schlotterer in No. 2:21-cv-05779.

Patrick Charles Lannen, Sean M. Colonna, Pro Hac Vice, Plunkett Cooney, Bloomfield Hills, MI, Daniel J. Hurley, David L. VanSlyke, Plunkett Cooney, Columbus, OH, David Michael DeVillers, Barnes & Thornburg LLP, Columbus, OH, for Defendant Jeffery Ely in No. 2:21-cv-05779.

Patrick Charles Lannen, Plunkett Cooney, Bloomfield Hills, MI, Daniel J. Hurley, Plunkett Cooney, Columbus, OH, David Michael DeVillers, Barnes & Thornburg LLP, Columbus, OH, for Defendant Michael Martin in No. 2:21-cv-05779.

David Michael DeVillers, Barnes & Thornburg LLP, Columbus, OH, Amanda L. Rauh-Bieri, Pro Hac Vice, Grand Rapids, MI, D. Andrew Portinga, Pro Hac Vice, James R. Peterson, Pro Hac Vice, Miller Johnson, Grand Rapids, MI, for Defendant David Hatton in No. 2:22-cv-03838.

David M. DeVillers, David Michael DeVillers, Jeffrey Adam Bartolozzi, William A. Nolan, Barnes & Thornburg, LLP, Columbus, OH, Amanda Rauh-Bieri, Pro Hac Vice, D. Andrew Portinga, Pro Hac Vice, James R. Peterson, Pro Hac Vice, Miller Johnson, Grand Rapids, MI, Amanda L. Rauh-Bieri, Pro Hac Vice, Grand Rapids, MI, for Defendant People Driven Technology, Inc. in No. 2:22-cv-03838.

OPINION & ORDER

ALGENON L. MARBLEY, CHIEF UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

In 2016, the Engens sold their family business, Netech, to Presidio Infrastructure Solutions LLC ("PIS"). Five years later, the Engens started a new company—People Driven Technology, Inc. ("PDT")—which soon began competing with the affiliate of PIS, Presidio Networked Solutions LLC ("PNS"), that had taken on the former employees of Netech after it was acquired by PIS. According to PNS, its parent company, Presidio, Inc., and its subsidiary, Presidio Networked Solutions Group LLC ("PNSG") (collectively, "the Presidio Plaintiffs"), PDT's approach to competition was illegal. They therefore sued PDT and a handful of the employees who left PNS for PDT—specifically, Joseph Schaumleffel, Thomas Schlotterer, Jeffery Ely, and Michael Martin (the "Individual Defendants")—in December 2021 for breach of contract, trade secret misappropriation, trademark infringement, and tort claims arising out of unfair competition ("the Lead Case"). They have also sued PDT and David Hatton, another employee who left PNS for PDT, for breach of contract and other tort claims, in a separate case ("the Member Case"); the two cases have now been consolidated.

Now before this Court are the parties' respective motions for summary judgment, as well as several threshold evidentiary motions. For the reasons set forth below, this Court GRANTS PDT's Motion to Preclude (ECF No. 173);¹ GRANTS IN PART and DENIES IN PART the Individual Defendants' Corrected Motion for Summary Judgment (ECF No. 189) and PDT's Motion for Summary Judgment (ECF No. 171); DENIES Plaintiffs' Motion to Strike (ECF No. 164), Motion for Partial Summary Judgment (ECF No. 177), and Motion to Strike (ECF No. 205); and DENIES AS MOOT Plaintiffs' Motion for Partial Summary Judgment (ECF No. 176) and Defendants' Motion to Preclude (ECF No. 199).

II. BACKGROUND

A. Factual Background

1. The Acquisition of Netech

On December 31, 2015, PIS and Presidio Holdings, Inc. ("Presidio Holdings"), agreed to purchase Netech Corporation ("Netech"), an IT services and solutions integrator headquartered in Grand Rapids, Michigan, for $250 million. (See generally Asset Purchase Agreement ("APA"), ECF No. 175-58). Netech was founded in 1996 by James Engen and his partners, and remained privately-owned until the purchase. On the other side of the ledger, PIS was designated as the buyer and Presidio Holdings, which is an indirectly wholly-owned subsidiary of Presidio, Inc., was designated as the parent. (See id.).

As part of the purchase, PIS took on the entirety of Netech's business,² which was defined in the APA as "reselling internet protocol data and voice, data center, and physical security solutions services and hardware." (Id. at 1). PIS acquired "all rights in and to Intellectual Property relating to or arising out of the Business," "all goodwill of the Business," and "the name Netech and any derivation thereof." (Id. § 1.1(b)(i), (xx), (xxi)). PIS also assumed Netech's contracts with its employees, including "all of Seller's rights existing under Contracts relating to or arising out of the Business" and "all Liabilities and obligations with respect to Transferred Employees." (Id. §§ 1.1(b)(iv), 1.2(a)(iii)). The agreement allowed for PIS or one of its affiliates to offer employment to Netech's employees. (Id. § 5.6(a)).

The acquisition closed in early 2016. At that time, Netech assigned its employee agreements to PIS, pursuant to the Assignment and Assumption Agreement ("AAA"). These agreements included standard confidentiality and non-solicitation agreements. For example, Schlotterer signed a "Confidentiality/Non-Solicitation Agreement" with Netech on January 9, 2012, in which he agreed to keep all Netech proprietary information confidential and not to solicit any Netech employees to leave their positions for 12 months after his employment with Netech ended. (See Pls.' Ex. 3, ECF No. 175-4). He also agreed that: "[u]pon the cessation of his employment with Netech, [he would] (i) refrain from taking any such property from Netech's premises, and (ii) immediately return to Netech any such property which may be in my possession or control (including any and all copies thereof)." (Id. ¶ 2) (referring to "Netech keys, access codes, sales data, notes, tools, documents, records, and other equipment or property").

Each of the Individual Defendants signed an identical "Confidentiality/Non-Solicitation Agreement" when they joined Netech (collectively, "the Employment Agreements"). (See generally id.; Pls.' Ex. 4, ECF No. 175-5; Pls.' Ex. 5, ECF No. 175-6; Pls.' Ex. 6, ECF No. 175-7). So too did Hatton. Additionally, he signed a "Non-Compete Agreement," in which he agreed not to "directly or indirectly engage in any business with an existing or recent (within 6 months) customer of NETech Corporation's" or to "directly or indirectly solicit from any NETech current customer" for 12 months after the end of his employment with Netech. (Defs.' Ex. A, ECF No. 19-2 [No. 2:22-cv-03838]; see also Defs.' Ex. B, ECF No. 19-3 [No. 2:22-cv-03838]).

The AAA made clear that the assignments from Netech to PIS, including the assignments of the employment contracts, "will be binding upon, inure to the benefit of and be enforceable by and against such party and its legal representatives, successors, and authorized assigns." (AAA § 4, ECF No. 102-3). It also specified that the assigned rights are "for the sole and exclusive benefit of the parties hereto and their respective successors and permitted assigns" and could not be further assigned without consent from all parties. (Id. § 6). The only exception to this narrow list of beneficiaries was the "Parent," i.e., Presidio Holdings, who was "entitled to exercise all rights and remedies granted to Buyer under this Agreement and to enforce this Assignment on behalf of and/or in the name of Buyer." (Id.).

After closing, PIS merged with and into PNSG, which is a wholly-owned subsidiary of PNS. (See PDT Answer ¶¶ 20, 56, ECF No. 141). Netech's employees, including Hatton and the Individual Defendants, were offered and accepted employment with PNS. Both PNS and PNSG are indirectly wholly-owned subsidiaries of Presidio, Inc. (Id. ¶ 6).

2. The Engens Start PDT

As part of the acquisition agreement, the Engen family—specifically, James, the founder of Netech, and his sons, Ryan and Timothy—agreed not to compete against any of the Presidio entities for five years. (APA § 5.4, ECF No. 175-58). In late December 2020, the Engens founded PDT....