Arctic Energy Services, LLC v. Neal et al

Filing 90

ORDER by Judge Philip A. Brimmer on 06/28/2018, re: 57 Plaintiff's Motion for a Preliminary Injunction Against Defendants Dustin Ailport and Water Way Solutions, LLC is DENIED. (sphil)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Philip A. Brimmer
Civil Action No. 18-cv-00108-PAB-KLM
ARCTIC ENERGY SERVICES, LLC,
Plaintiff,
v.
DUSTIN NEAL,
DUSTIN AILPORT, and
WATER WAY SOLUTIONS, LLC,
Defendants.

ORDER

This matter is before the Court on Plaintiff’s Motion for a Preliminary Injunction
Against Defendants Dustin Ailport and Water Way Solutions, LLC [Docket No. 57]. The
Court has jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1367.
Plaintiff Arctic Energy Services, LLC is a Delaware limited liability company that
provides various services to oil and gas companies, including flow back, production well
testing, water transfer services, and equipment rentals. Docket No. 51 at 2, ¶ 5.
Defendants Dustin Ailport and Dustin Neal are former employees of plaintiff who now
work for defendant Water Way Solutions, LLC, a Wyoming limited liability company and
alleged competitor of plaintiff in the oil and gas industry. Id. at 2-3, ¶¶ 6-8. Plaintiff filed
this lawsuit on January 12, 2018, asserting claims for misappropriation of trade secrets
under the Federal Defend Trade Secrets Act, 18 U.S.C. § 1831 et seq., and the
Colorado Uniform Trade Secrets Act, Colo. Rev. Stat. § 7-74-101 et seq.; civil theft;

conversion; breach of the duty of loyalty; aiding and abetting breaches of fiduciary
duties; violations of the Computer Fraud and Abuse Act, 18 U.S.C. § 1030 et seq.;
intentional interference with prospective contractual relations; conspiracy; and
preliminary and permanent injunctive relief. Docket No. 1. On January 19, 2018,
plaintiff moved for a preliminary injunction based on its misappropriation of trade
secrets claims. Docket No. 11. The Court scheduled a full-day hearing on the motion
for February 20, 2018. Docket No. 28. On February 15, 2018, plaintiff filed an exhibit
list containing four exhibits, entitled “Employee Confidentiality and Unfair Competition
Agreement,” “Employment Agreement,” “Employee Non-Disclosure Agreement,” and
“Confidentiality Agreement” (Exhibits 10-13). Docket No. 37-1 at 2. Defendants filed
an objection to these exhibits on February 16, 2018, asserting that the exhibits had not
previously been disclosed. Docket No. 39 at 1-2, ¶ 2. On February 16, 2018, the Court
ordered plaintiff to produce copies of the exhibits to defendants and the Court by the
end of the day. Docket No. 41. The Court otherwise overruled defendants’ objection.
Id.
During the February 20 preliminary injunction hearing, plaintiff introduced
Exhibits 10-12 as evidence that it had taken steps to prevent the disclosure of
confidential information. Docket No. 44. Plaintiff stated that it was “not trying to
enforce” the employment agreements or assert claims for breach of contract. At the
end of the hearing, the Court found that all four of the preliminary injunction factors
weighed in favor of plaintiff on its misappropriation of trade secrets claims. On
February 22, 2018, the Court entered a written order preliminarily enjoining defendants
from “deleting, destroying, erasing, or otherwise making unavailable . . . any business
2

information of plaintiff”; “using, disclosing, or otherwise making publicly available for any
purpose confidential information . . . obtained as a result of Mr. Ailport’s and Mr. Neal’s
employment with plaintiff”; or “soliciting any current client of plaintiff through the use of
[plaintiff’s] confidential information.” Docket No. 45 at 8-9.
On March 14, 2018, plaintiff filed an amended complaint adding claims for
breach of contract against defendant Dustin Ailport based on the employment
agreements introduced at the February 20, 2018 preliminary injunction hearing. Docket
No. 51. On March 28, 2018, plaintiff filed a second motion for a preliminary injunction
predicated on the newly-asserted breach of contract claims. Docket No. 57. In the
motion, plaintiff states that the preliminary injunction entered on February 22, 2018
“does not go far enough” and that plaintiff is entitled, pursuant to the terms of defendant
Ailport’s employment agreements, to an order enjoining defendants Ailport and Water
Way from “(i) competing with Arctic, (ii) soliciting any Arctic customer, (iii) starting any
new jobs with any former or current Arctic customer, and (iv) soliciting any Arctic
employee.” Id. at 2, 16. To explain why it did not assert its breach of contract claims
earlier, plaintiff states that “[d]efendants and their co-conspirators concealed the Ailport
Agreements from Arctic,” such that the agreements were only discovered “shortly prior
to the previous hearing held by this Court on February 20, 2018.” Docket No. 57 at 2.
Plaintiff also asserts that “certain other pertinent Dustin Ailport em ployment records”
were not discovered until March 18, 2018. Id.1 Defendants Ailport and Water Way filed
1

Although these additional employment records, which consist of drug-testing
consent/acknowledgment forms, a criminal history consent form, and a W-4 form, see
Docket Nos. 57-4, 57-5, 57-6, 57-7, may be relevant to the issue of whether the
employment agreements were supported by consideration, see Docket No. 85 at 4-5,
3

a response to plaintiff’s motion on April 19, 2018, Docket No. 70, to which plaintiff
replied on May 9, 2018. Docket No. 80. None of the briefs address the fact that,
before the preliminary injunction hearing on February 20, 2018, defendants objected to
the introduction of the employment agreements on the ground that they had not
previously been disclosed. On May 21, 2018, the Court ordered the parties to f ile
supplemental briefs addressing: (1) the facts and circumstances surrounding
defendants’ alleged concealment of the employment agreements; (2) the date plaintiff
first became aware of the employment agreements; (3) the date plaintiff first obtained
copies of the employment agreements; (4) the means by which plaintiff obtained copies
of the employment agreements; (5) the reasons why plaintiff did not discover certain
other employment records pertaining to defendant Ailport until March 18, 2018; and (6)
any other facts or information relevant to plaintiff’s ability to assert its breach of contract
claims in the original complaint. Docket No. 83 at 2.
In its supplemental brief, filed on May 29, 2018, plaintiff alleges that Shane and
Jill Ailport – the key executives and 100% owners of Arctic Oilfield Services LLC (“Old
Arctic”) – and HR Manager James Paddison deliberately concealed defendant Ailport’s
employment agreements from Prospect Capital Corporation, Arctic’s new majority
owner. Docket No. 85 at 2-3. Specifically, plaintiff asserts that Shane and Jill Ailport
entered into a Contribution Agreement with plaintiff on May 5, 2014, in which they
represented that they had provided plaintiff with a “complete and correct list of . . . all

they are not the basis for plaintiff’s breach of contract claims. Plaintiff does not argue
that it could not have asserted its breach of contract claims before obtaining these
additional records on March 18, 2018.
4

employment agreements . . . between [Arctic] and any of its past or current
shareholders, owners, partners, members, directors, officers, or key management
employees.” Id. at 2. That list did not contain defendant Ailport’s employment
agreements. Plaintiff further avers that both James Paddison, who continued as
Arctic’s HR Manager after the 2014 merger, and Shane Ailport informed Arctic director
David Belzer that defendant Ailport did not have any employment agreements. Id. at
3.2 Plaintiff states that it relied on these representations until m id-December 2017,
when, after learning “about Paddison’s other efforts to conceal and misappropriate for
Defendant Ailport’s benefit . . . , [it] dispatched its new HR/Benefits Coordinator,
Savannah Dela Vega . . . to search for any employment agreements entered into by
Defendants Ailport or Neal.” Id. at 4. Ms. Dela Vega allegedly discovered the
employment agreements “in a file that had been kept in an old box in a storage room at
Arctic’s former Glenrock office” on January 31, 2018. Id. at 4. According to plaintiff,
only certain pages of the employment agreements were initially transmitted to Arctic’s
new management due to an inadvertent scanning error. Id. at 4 n.3. By February 12,
2018, Arctic’s new management had obtained complete copies of the employment
agreements. Id. at 4.
Defendants’ supplemental brief asserts that “Arctic has owned and controlled the
records, documents, and equipment of former Arctic Oilfield Services, Inc. since on or
before May 5, 2014.” Docket No. 84 at 2. Defendants further state that Mr. Paddison’s

2

Plaintiff states that Mr. Paddison made this representation on or about
November 14, 2017. Docket No. 85 at 3. Plaintif f does not provide a date or temporal
context for Mr. Ailport’s representation.
5

resignation from Arctic on December 11, 2017 “gave Arctic’s agents and other
employees full and unfettered access to the employment records . . . no later than
December 12, 2017.” Id. Finally, defendants contend that the amended complaint,
filed by plaintiff in its New York lawsuit against Shane and Jill Ailport on February 9,
2018, demonstrates that Arctic “possessed the subject employment agreements prior to
February 9, 2018.” Id. at 3. The amended complaint, which is attached to defendants’
supplemental response as Exhibit B, alleges, in relevant part, that Dustin Ailport
entered into various employment agreements with Old Arctic on or about January 1,
2010. Docket No. 84-3 at 18, ¶ 83.
Based on the parties’ supplemental filings, the Court finds that plaintiff has not
shown good cause for failing to raise its breach of contract arguments at the February
20, 2018 preliminary injunction hearing. Even accepting plaintiff’s timeline of events,
plaintiff was aware of defendant Ailport’s employment agreements by January 31, 2018
and had obtained complete copies of those agreements by February 12, 2018.
Although plaintiff had already filed its complaint and preliminary injunction motion at that
time, the full-day evidentiary hearing on plaintiff’s motion was over a week away.
Nothing prevented plaintiff from moving to continue the preliminary injunction hearing
and to amend its complaint based on the newly-discovered employment agreements.
As courts have indicated in similar contexts, “separate adjudications of piecemeal
motions . . . are not favored under the Federal Rules of Civil Procedure.” Int’l Bus.
Machs. Corp. v. Johnson, 2009 WL 2356430, at *2 (S.D.N.Y. July 30, 2009) (quoting
Tilcon Minerals, Inc. v. Orange Rockland Utils., Inc., 851 F. Supp. 529, 531 (S.D.N.Y.

6

1994)); see also Fed. R. Civ. P. 1 (stating that the Federal Rules of Civil Procedure
“should be construed, administered, and employed by the court and the parties to
secure the just, speedy, and inexpensive determination of every action and
proceeding”). Instead, parties “ought to be held to the requirement that they present
their strongest case for relief when the matter is first raised,” Int’l Bus. Machs. Corp.,
2009 WL 2356430, at *2 (internal quotation marks and brackets omitted), and should
not be permitted “to harass their adversaries and the courts with a barrage of
successive motions for extraordinary, preliminary injunctive relief.” F.W. Kerr Chem.
Co. v. Crandall Assoc., Inc., 815 F.2d 426, 429 (6th Cir. 1987). Plaintif f asserts that it
“could not delay in bringing claims of trade secrets theft based on the information it had”
at the time of the filing of its original complaint. Docket No. 85 at 5. But plaintiff’s
failure to consolidate its requests for injunctive relief has resulted in an unnecessary
expenditure of the Court’s and the parties’ resources. Given that plaintiff’s second
motion for a preliminary injunction seeks substantially the same relief as plaintiff’s first
motion – namely, an order enjoining defendants from accepting business from plaintiff’s
customers, compare Docket No. 11-1 at 2 (requesting order enjoining defendants from
“[a]ccepting any business from any Arctic customer that was a customer of Arctic’s
while Defendants Neal and Ailport were employed by Arctic, obtained by Defendants
since their misappropriation of the Materials”), with Docket No. 61 at 2 (requesting order
enjoining defendants from “[c]ompeting with Arctic,” “[s]oliciting any Arctic customer,” or
“[s]tarting any new jobs with any former or current Arctic customer”)3 – plaintiff should
3

Plaintiff narrowed the scope of its requested relief at the preliminary injunction
hearing.
7

have made every effort to raise its breach of contract claims at the first preliminary
injunction hearing. Plaintiff’s failure to do so does not entitle it to a second bite at the
apple. See Int’l Bus. Machs. Corp., 2009 WL 2356430, at *2 (declining to “allow IBM to
litigate [the] matter through piecemeal, seriatim motions requesting the same relief”).
For the foregoing reasons, it is
ORDERED that Plaintiff’s Motion for a Preliminary Injunction Against Defendants
Dustin Ailport and Water Way Solutions, LLC [Docket No. 57] is DENIED.

DATED June 28, 2018.
BY THE COURT:

s/Philip A. Brimmer
PHILIP A. BRIMMER
United States District Judge

8