United States District Court, S.D. Ohio, Eastern Division
Elizabeth Preston Deavers Magistrate Judge
OPINION AND ORDER
A. SARGUS, JR. CHIEF UNITED STATES DISTRICT JUDGE
matter is before the Court on Plaintiffs' Application for
a Temporary Restraining Order ("TRO") (ECF No. 10),
on which this Court took evidence and oral argument at two
in-court hearings and on brief, and Defendants' Motion to
Dissolve the State Court TRO (ECF No. 6). For the reasons set
forth below and on the record at the hearings on this matter,
the Court DENIES Plaintiffs' Motion and
DENIES AS MOOT Defendants' Motion.
December 6, 2017, Plaintiff Exel Inc. d/b/a DHL Supply Chain
("Plaintiff and/or "DHL") filed this case in
the Delaware County Ohio, Court of Common Pleas. (ECF No.
1-1.) On that same day, the state court issued an ex
parte TRO in favor of DHL and scheduled a preliminary
injunction hearing for December 20, 2017, the date on which
the TRO would expire. (ECF No. 1-8.)
December 12, 2017, Defendants Xpedient Management Group, LLC
("Xpedient"), John Curry, and John White (together
"Defendants") removed the case to this Court. (ECF
No. 1.) On December 14, 2017, Defendants filed a Motion to
Dissolve the State Court TRO. (ECF No. 6.) The Court held a
telephone conference on December 15, 2017 (ECF No. 4), at
which it scheduled a hearing for December 18, 2017, to
address Plaintiffs request to have this Court enter a TRO
before the expiration of the state court TRO (ECF No. 7).
December 18, 2017, the Court held an all-day hearing on
Plaintiffs' request for a TRO ("TRO Hearing").
(ECF No. 11.) At the TRO Hearing, the Court extended the
dissolution date of the state court TRO from December 20,
2017 to December 22, 2017, directed the parties to file
simultaneous briefs on the matter, and scheduled a final
hearing for December 22, 2017 ("Final TRO
Hearing"). (ECF No. 12.)
parties filed their post hearing briefs on December 21, 2017.
(Defs.' Post Hearing Brief, ECF No. 16; Pl's Post
Hearing Brief, ECF Nos. 17, IS.) Plaintiff combined its response
in opposition to Defendants' Motion to Dissolve the State
Court TRO with its post-hearing TRO brief. On December 22,
the Court held the Final TRO Hearing at which it took oral
argument on the TRO briefing. (ECF No. 20.). At the Final TRO
Final Hearing, the Court denied Plaintiffs request for a TRO
(ECF No. 21), which rendered moot Defendants' request to
dissolve the state court TRO. This opinion supplements and
memorializes the Court's decision. (Final TRO Hearing
Tr., ECF No. 23.)
Undisputed Relevant Facts
Curry worked at DHL from February 1, 2006, through July 12,
2015. During his employment at DHL, Mr. Curry served as
General Manager of the DHL-managed Discount Tire warehouse in
California from 2007 to 2009, Director of Operations from
2009 to 2011, and Senior Director of Operations from 2011 to
2014, Mr. Curry was promoted to Vice President in DHL's
Automotive Sector. Mr. Curry had primary responsibility for
DHL's accounts with Discount Tire, Chrysler/Fiat, and
Nissan. At the time of the promotion, Mr. Curry signed an
Employment Agreement with various restrictive covenants,
including non-competition and non-solicitation provisions.
(Emp't Agreement, Compl. Ex. 1, ECF No. 1-1.)
December 2014, Mr. Curry informed DHL's President of its
Automotive Sector, Mark Kunar, that he was planning to leave
his employment with DHL, Mr. Kunar asked Mr. Curry to stay,
which he did. In February 2015, Mr, Curry approached Mr.
Kunar again and told him that he was leaving DHL. Mr. Kunar
asked Mr. Curry to stay until a replacement was found. When
no replacement had been found, Mr. Curry terminated his
employment with DHL on July 12, 2015.
Emergency Injunctive Relief Request
moves this Court for a TRO that would enjoin Defendants from
"soliciting DHL's customers and competing against
DHL in violation of applicable Non-Solicitation and
Non-Competition Covenants in Mr. Curry's Employment
Agreement with DHL, and from any further unauthorized use,
disclosure, dissemination, or actual or threatened
misappropriation of DHL's trade secrets, including
DHL's confidential bid materials [("Discount Tire
Supplemental Bid")] that DHL submitted to one of its
customers for a pending contract for tire supply chain
management services relating to a new warehouse facility in
Dallas, Texas, for which DHL and Defendants are competing
." (Proposed TRO, ECF No. 17-1.) DHL argues that there
are two independent reasons why the Court should issue a TRO
(1) Defendants' recent misappropriation of Plaintiff
[DHL's] confidential [Discount Tire Supplemental Bid] in
connection with a pending contract for the new tire facility
in Dallas, Texas for which DHL and Defendants are competing.
(2) Defendants' improper solicitation of DHL's
long-standing customer, Continental Tire, and direct
competition against DHL within the Restricted Period under
Defendant Curry's Non-Solicitation and Non-Competition
Covenants with DHL and their continuous violation of those
restrictive covenants through today.
(Pl's Post Hearing Brief ECF No. 17 at 1.)
case is before the Court on diversity jurisdiction.
"Under the Erie doctrine, federal courts
sitting in diversity apply the substantive law of the forum
state and federal procedural law." Biegas v,
Quickway Carriers, Inc., 573 F.3d 365, 374 (6th Cir.
2009) (citing Erie R. Co. v. Tompkins, 304 U.S. 64
(1938)). When interpreting contracts in a diversity action,
the courts of the Sixth Circuit "also generally enforce
the parties' contractual choice of governing law."
Savedoff v. Access Group, Inc., 524 F.3d 754, 762
(6th Cir. 2008). Mr. Curry's Employment Agreement
provides that Ohio law applies. (Emp't Agreement §
6(f), Compl. Ex. 1, ECF No. 1-1)
determining whether to issue a temporary restraining order,
this Court must consider "(1) whether the movant has a
'strong' likelihood of success on the merits; (2)
whether the movant would otherwise suffer irreparable injury;
(3) whether issuance of a preliminary injunction would cause
substantial harm to others; and (4) whether the public
interest would be served by issuance of a preliminary
injunction." Summit County Democratic C. and Exec.
Comm. v. Blackwell, 388 F.3d 547, 550-51 (6th Cir. 2004)
(quoting Leary v. Daeschner, 228 F.3d 729, 736 (6th
Cir. 2000)). These elements are not prerequisites, but are
factors that are to be balanced against each other.
United Food & Commercial Workers Union, Local 1099 v.
Southwest Ohio Reg'l Transit Auth., 163 F.3d 341,
347 (6th Cir. 1998). "A district court is required to
make specific findings concerning each of the factors unless
fewer are dispositive of the issue." Performance
Unlimited v. Questar Publishers, Inc., 52 F.3d 1373,
1381 (6th Cir. 1995) (citation omitted). A preliminary
injunction is an extraordinary remedy that should be granted
only if the movant carries its burden of proving that the
circumstances clearly demand it. Overstreet v.
Lexington-Fayette Urb. County Govt., 305 F.3d 566, 573
(6th Cir. 2002) (citing Leary, 228 F.3d at 739).
instant action, the Court underweights factors three and
four. See Patio Enclosures, Inc. v. Herbst, 39
Fed.Appx. 964, 969-70 (6th Cir. 2002) ("In its balancing
of the four factors involved in the decision whether to grant
a preliminary injunction, the district court underweighted
factors three and four, 'substantial harm to others'
and 'public interest.' This was entirely
appropriate."). Substantial harm to others would not be
a factor on the facts before the Court if Plaintiff meets its
burden of showing irreparable harm and that there is a strong
likelihood that it will succeed on the merits of the claims
upon which it moves for injunctive relief. Likewise, the
public interest would not be served if that kind of
irreparable harm alleged here were not remedied. Id.
(explaining that "the public generally may have an
interest in seeing that reasonable non-compete covenants are
enforced, " yet noting that the public interest may also
"best be served by allowing a successful salesman to
continue performing his trade"). Consequently, the first
two elements of the emergency injunctive relief analysis are
dispositive of the issue, and are therefore the focus of this
Court's, and the parties', analysis.
first basis upon which Plaintiff DHL moves for a TRO is
Defendants' alleged misappropriation of DHL's
Discount Tire Supplemental Bid, which Plaintiff maintains
violates Ohio's Uniform Trade Secrets Act.
Xpedient are currently competing for a contract with one of
DHL's longstanding customers, Discount Tire, at a new
warehouse facility near Dallas, Texas. (Tr. at 13, 72-73, 75
(Curry); Tr. at 98 (Lutwen).) This new facility will replace
Discount Tire's nearby warehouse facility in Grand
Prairie, Texas, where DHL is currently under contract with
Discount Tire for supply chain management services. (Tr. at
105-06, 110, 120 (Lutwen).) DHL submitted its initial bid in
May 2017. (Tr. at 112 (Lutwen).) Xpedient submitted its bid
in July 2017. (Tr. at 13 (Curry).)
receiving the first-round bids, Discount Tire requested a
supplemental bid from DHL to address specific technological
and staffing issues. (Tr. at 112 (Lutwen).) In response,
DHL's bid team prepared the Discount Tire Supplemental
Bid, a 73-page document titled "Discount Tire Supply
Chain Strategy." (Pl's TRO Hearing Ex. 9.) DHL
marked every substantive page of the Discount Tire
Supplemental Bid as "CONFIDENTIAL AND PROPRIETARY."
(Pl's TRO Hearing Ex. 9; Tr. at 106 (Lutwen).) It did not
distribute the Bid to any person outside of DHL, other than
its customer, Discount Tire, subject to confidentiality
restrictions. (Tr. at 92-94, 101, 178 (Lutwen).) Mr. Lutwen
testified that DHL and Discount Tire have confidentiality
agreements, pursuant to which each side agrees to keep
confidential the other's technological and proprietary
information, staffing, methods, and processes for their
mutual operations - the same information that is contained in
DHL's Bid Proposal. (Tr, at 92- 94, 178(Lutwen).)
Lutwen also testified that, based on the more than 100
competitive bidding processes in which he has been involved
during his career in the supply chain management and
logistics business, it is standard practice and custom in the
industry that bid proposals are kept confidential and not
shared with any competing bidders. (Tr. at 94-95 (Lutwen).)
Mr. Curry too could not recall any time while working at DHL
that he was privy to a competitor's bid. (Tr. at 12-13
(Curry).) When questioned about whether there is customarily
confidential information in bid proposals, Mr. Curry
testified as follows:
Q. Would you have any reason not to share [Xpedient's bid
proposal] it with DHL?
A. I mean, I don't think it's something that we would
go out of our way to share. I mean, there was certainly some
solution design things that we would not openly share with
Q. In your bid proposal?
Q. And you would expect DHL's bid proposal to also
contain confidential competitive information that it would
not want to share with its competitors, correct?
(Tr. at 13 (Curry).)
same month that DHL submitted the Discount Tire Supplemental
Bid, an employee at Discount Tire supplied at least some
redacted portions of it to Mr. White who shared it with Mr.
Curry. (Tr. at 48-53 (Curry).) Mr. Curry testified that he
did not disclose the Bid to anyone. (Tr. at 49 (Curry).)
However, DHL presented testimony of a high ranking manager at
DHL, Daniel Bilbao, who stated that he was "100
percent" sure that Mr. Curry showed him on his smart
phone a portion of the Organizational Chart that was on page
3 of the Discount Tire Supplemental Bid. (Tr. at 12, 16-17
(Bilbao); PI. TRO Hearing Ex. 9.) For purposes of
this emergency proceeding, the Court credits Mr. Bilbao's
testimony. He recalled that the Organizational Chart showed
that DHL was replacing Bilbao as the General Manager for
Discount Tire's Grand Prairie, Texas facility and was
substituting another DHL employee. (Tr. at 12 (Bilbao).) Mr.
Curry suggested that Mr. Bilbao leave his employment at DHL
and join Xpedient. (Tr. at 13-14 (Bilbao).)
was no evidence presented reflecting that Xpedient utilized
the information it had from the Discount Tire Supplemental
Bid at any time other than his meeting with Mr. Bilbao. Nor
was there testimony specifying what other unredacted portions
of the Bid were in Mr. Curry's possession except for the
Organizational Chart discussed supra.
Uniform Trade Secrets Act provides that "[a]ctual or
threatened misappropriation [of trade secrets] may be
enjoined." Ohio Rev. Code § 1333.62(A). Because the
statute does not prescribe criteria for issuing the
injunction, "the general equitable principles governing
the issuance of injunctive relief apply. Procter &
Gamble Co. v. Stoneham, 140 Ohio App.3d 260, 268 (Ohio
Ct. App. 1st Dist. 2000). Ohio courts have therefore required
plaintiffs to carry the burden of showing emergency
injunctive relief is appropriate. Hydro/arm, Inc. v.
Orendorff, 180 Ohio App.3d 339, 347 and n.3 (Ohio Ct.
App. 10th Dist. 2008).
Likelihood of Success on the Merits
Court has explained that "[t]o obtain an injunction to
preclude misappropriation of trade secrets under Ohio's
Uniform Trade Secrets Act, [a plaintiff] must show that there
was actual or threatened misappropriation of its trade
secrets." Ak Steel Corp., v. Miskovich,
1:14CV174, 2014 WL 11881029, at *4 (S.D. Ohio Apr. 17, 2014)
(citing Ohio Rev. Code. § 1333.61, et seq.).
Under Ohio Revised Code § 1333.61(D), a "trade
secret" is defined as:
information, including the whole or any portion or phase of
any scientific or technical information, design, process,
procedure, formula, pattern, compilation, program, device,
method, technique, or improvement, or any business
information or plans, financial information, or listing of