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Jacobs v. Securitas Electronic Security, Inc.

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

April 16, 2019

WESLEY JACOBS, Plaintiff,
v.
SECURITAS ELECTRONIC SECURITY, INC., Defendant.

          JUDGE SARA LIOI

          REPORT & RECOMMENDATION

          KATHLEEN B. BURKE UNITED STATES MAGISTRATE JUDGE.

         This case is before the undersigned for a report and recommendation on Defendant Securitas Electronic Security's (“Securitas”) motion for temporary restraining order (“TRO Motion”) filed on April 9, 2019. Doc. 5.[1] Plaintiff Wesley Jacobs (“Jacobs”) filed a response on April 10, 2019, Doc. 8, and the undersigned held a telephone conference with counsel on April 10.[2]

         For the reasons explained below, the undersigned recommends that the Court GRANT in part and DENY in part Securitas' TRO Motion. Specifically, the undersigned recommends that the Court GRANT the TRO Motion insofar as it seeks to restrict Jacobs from working directly or indirectly with clients he worked with during the last year of his employment with Securitas or with prospective clients of Securitas that he was assigned to solicit business from during that period. In addition, the undersigned recommends that Jacobs be enjoined from disclosing or utilizing proprietary information or soliciting any employee or agent of Securitas to terminate employment with Defendant. The undersigned recommends that the Court DENY the TRO Motion to the extent it would prevent Jacobs from working for Defendant's competitor, Convergent, in any capacity.

         I. Background

         Defendant Securitas is “a security-systems integrator and security-monitoring provider, which sells, installs, operates, and monitors various products, systems, and services, including software solutions.” Doc. 4, p. 11, ¶4. On June 11, 2018, Securitas purchased a company called Kratos, [3] where Jacobs had worked as an account executive since December 2011. Doc. 1, p. 2, ¶¶6, 11. At Kratos, Jacobs was paid commissions and was given access to customer and sales data, which allowed him to confirm that he had been paid all commissions due. Doc. 1, p. 2, ¶10; Doc. 4, p. 17, ¶28.

         When Securitas purchased Kratos, Jacobs became an employee of Securitas. In September 2018, Securitas required Jacobs to sign a noncompetition and non-solicitation agreement (hereinafter, “Agreement”) in order to continue to earn commissions on his existing customers. Id., ¶11. The Agreement reads, in pertinent part:

[E.] 3. Non-Disclosure. In exchange for the Associate's receipt and use of the Company and/or its Related Companies' Proprietary Information . . ., and in consideration of the Associate's employment or continued employment with the Company and the compensation and benefits arising from that employment or continued employment . . ., the Associate agrees not to directly or indirectly, either during employment with the Company or thereafter, use or disclose Proprietary Information to or for the benefit of any person not authorized by the Company to receive or benefit from such Proprietary Information.. . .[4]
* * *
[F.] 4. Non-Competition Post-Termination. For a period of one (1) year following the Associate's termination from employment with the Company, . . ., the Associate shall not, within the employee's assigned market area, where the Company or any of its Related Companies market, sell, install, operate, monitor, or maintain their products, systems or services, engage in any Competing Business Activity . . . regarding any product, service, system, or business for which the Associate had any responsibility during the last two (2) years of his or her employment with the Company.[5]
* * *
5. Non-Solicitation of Customers. If the Associate's duties . . . involve selling . . ., then for a period of one (1) year following the Associate's termination of employment from the Company, . . . the Associate shall not: (a) directly or indirectly solicit, or assist others in soliciting business from any Restricted Customer . . .; or(b) in any manner make, attempt to make, or assist others in making Sales of products or services that are in competition with the Company's products or services to any Restricted Customer.”[6]

Doc. 1-1, pp. 4-5.

         Jacobs' job title at Securitas was “Strategic Accounts Manager.” Doc. 4, p. 16, ¶23. In about October 2018 through March 15, 2019, his title changed to “Senior Account Executive - National Financial Sales.” Doc. 4, p. 16, ¶23. Securitas states that, in both roles, “Jacobs was primarily responsible for executing sales and marketing strategies to achieve sales goals for Securitas products and services, including supporting Securitas customers, proposing Securitas solutions that would meet customer requirements, leading customer discussions and negotiations to secure sales, and ensuring successful post-sale implementation and follow-up.” Doc. 4, pp. 16-17, ¶24. He had large accounts in the United States and Canada assigned to him. Counsel indicated, during the telephone conference with the Court, that Jacobs' principal client, during the last year of his employment with Securitas and Kratos, was JPMorgan Chase. See also id., ¶26.

         Jacobs was the primary point of contact for accounts assigned to him, and, Securitas alleges, had access to confidential and proprietary information, including information concerning current and potential customers, accounts, sales, costs, suppliers, processes, and pricing. Id., ¶27. Counsel for Securitas explained that, in addition to Jacobs' assigned client JPMorgan Chase, Jacobs was part of Securitas' national financial sales team, which discussed other large financial institutions that were prospective clients. See also Doc. 11, p. 4.

         Jacobs alleges that he performed the same job for Securitas that he did for Kratos, he had the same customers, and he was not given “any new information whatsoever since he began his employment with Securitas, and certainly no new ‘Proprietary Information.'” Doc. 1, p. 4, ¶22. He asserts that Securitas substantially reduced his earned commissions on his existing clients and took away several customer accounts that he had developed when he worked for Kratos, prior to Securitas purchasing Kratos. Id., ¶¶24-25. As a result, Jacobs alleges, he was left with a smaller customer base and a reduced ability to earn commissions; he also alleges that Securitas has engaged in a variety of acts that have caused it to underpay or avoid paying him commissions that are due him. Id., ¶¶25, 27-29.

         On March 1, 2019, Jacobs left Securitas and began working in a similar capacity for Convergint, a competitor of Securitas. Id., p. 5, ¶33. Counsel indicated that his work for Convergint involves only clients located in the United States.

         Jacobs filed a Complaint alleging breach of contract and seeking contractual remedies for Securitas' alleged failure to pay him commissions; he also requested a judgment declaring that the Agreement is unenforceable. Doc. 1. Securitas filed an Answer and Verified Counterclaim (Doc. 4) and the TRO Motion, in which it seeks to enjoin Jacobs from violating the terms of the Agreement. Doc. 5.

         II. Legal Standard

         A. TRO standard

         “[T]he purpose of a TRO under Rule 65 is to preserve the status quo so that a reasoned resolution of a dispute may be had.” Reid v. Hood, 2011 WL 251437, at *2, (N.D. Ohio Jan. 26, 2011) (quoting Procter & Gamble Co. v. Bankers Trust Co., 78 F.3d 219, 227 (6th Cir. 1996)). TROs expire “at the time after entry-not to exceed 14 days-that the court sets” unless extended by the court for good cause or by consent of the enjoined party. Fed.R.Civ.P. 65(a)(2).

         The standard for issuing a TRO is the same as for a preliminary injunction; however, the emphasis is on irreparable harm “given that the purpose of a temporary restraining order is to maintain the status quo.” Reid, 2011 WL 251437, at *2 (citing Motor Vehicle Bd. of Calif. v. Fox, 434 U.S. 1345, 1347 n.2, (1977)).

         When determining a motion for TRO, courts consider whether the moving party meets its burden in establishing the following four factors: 1) whether the moving party has a strong or substantial likelihood of success on the merits; 2) whether the moving party will suffer irreparable harm unless injunctive relief is granted; 3) whether the requested relief will cause substantial harm to third parties; and 4) whether injunctive relief is in the public interest. Northeast Ohio Coal. for Homeless and Service Emps. Int'l Union v. Blackwell, 467 F.3d 999 (6th Cir. 2006); Jones v. Caruso, 569 F.3d 258, 265 (6th Cir. 2009). “These factors are not prerequisites but are factors that are to be balanced against each other.” Overstreet v. Lexington-Fayette Urban Cnty. Gov't, 305 F.3d 566, 573 (6th Cir. 2002). “A preliminary injunction is an extraordinary remedy which should be granted only if the movant carries his or her burden of proving that the circumstances clearly demand it.” Id. (citing Leary v. Daeschner, 228 F.3d 729, 739 (6th Cir. 2000)).

         B. Ohio law

         Under Ohio law, a non-compete agreement is enforceable only to the extent its terms are reasonable. Procter & Gamble Co. v. Stoneham, 747 N.E.2d 268, 270 (Oh. Ct. App. 2000). A non-compete is reasonable if three conditions are met: (1) it goes no further than necessary to protect the legitimate interests of the employer; (2) it does not impose undue hardships on the employee; and (3) it is not injurious to the public. FirstEnergy Solutions Corp. v. Flerick, 521 Fed. App'x 521, 525-526 (6th Cir. 2013) (citing ...


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