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Exel Inc. v. Xpedient Management Group, LLC

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

January 16, 2018

EXEL INC., d/b/a DHL SUPPLY CHAIN, Plaintiff,

          Elizabeth Preston Deavers Magistrate Judge



         This 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.


         A. Procedural Background

         On 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.)

         On 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).

         On 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.)

         The 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[1].) 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.)

         B. Undisputed Relevant Facts

         Mr. 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.

         In June 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.)

         In 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.

         C. Emergency Injunctive Relief Request

         Plaintiff 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 against Defendants:

(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.)


         This 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)

         In 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).

         In the 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.


         The 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.

         A. Testimony

         DHL and 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).)[2] 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).)

         After 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).)

         Mr. 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 competitors.
Q. In your bid proposal?
A. Yes.
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?
A. Correct.

(Tr. at 13 (Curry).)

         The 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)[3]; 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).)

         There 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.

         B. Analysis

         Ohio's 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).

         1.Strong Likelihood of Success on the Merits

         This 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 ...

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