Thyssenkrupp Elevator Corporation v. Hubbard

Filing 48

OPINION AND ORDER denying ThyssenKrupp Elevator's Motion for Permanent Injunction 17 ; granting in part ThyssenKrupp Elevator's Motion for Preliminary Injunction 17 . See Opinion and Order for details. Signed by Judge John E. Steele on 11/4/2013. (MAB)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
THYSSENKRUPP ELEVATOR CORPORATION,
Plaintiff,
vs.

Case No.

2:13-cv-202-FtM-29UAM

LARRY HUBBARD, JR.,
Defendant.
___________________________________
OPINION AND ORDER
This matter comes before the Court on Plaintiff ThyssenKrupp
Elevator’s Amended Motion for Preliminary and Permanent Injunctive
Relief (Doc. #17) filed on April 16, 2013.

Defendant filed a

Memorandum in Opposition (Doc. #33) on July 2, 2013.

The parties

also filed an Affidavit of Larry Hubbard (Doc. #33, Exh. A), an
Affidavit of John Atherton (Doc. #33, Exh. B), an Affidavit of
Grant Gorski (Doc. #33, Exh. C), an Affidavit of Charles Rod
Middleton (Doc. #35), a Declaration of Richard Francis (Doc. #37),
portions of Larry Hubbard’s deposition (Doc. #38), and portions of
John Atherton’s deposition (Doc. #39).

The Court heard oral

argument on July 26, 2013, and allowed each party to submit a
supplemental memorandum addressing plaintiff’s standing to enforce
the non-compete agreement.

(Docs. ## 45, 47.)
I.

Plaintiff ThyssenKrupp Elevator Corporation (ThyssenKrupp or
plaintiff) provides components, systems, and customized service

programs for elevators, escalators, and moving walks to customers
throughout the country.

Defendant Larry Hubbard, Jr. (Hubbard or

defendant) began his employment with ThyssenKrupp’s predecessor,
General Elevator Sales and Service, Inc. (GESS), in August 2007.
As a condition of his employment, Hubbard signed a General Elevator
Sales

&

Service,

Intellectual
(Employment

Inc.

Property
Agreement)

Agreement

on

Confidential

Non-Solicitation
on

August

21,

and

2007.

Information,

Non-Competition
The

Employment

Agreement contains the following restrictive covenants:
2.
I will not during the term of my employment with
Employer and for two (2) years hereafter, act as a
competitor to Employer regarding customers and/or
prospective customers within the following geographical
area: Lee County, Collier & Hendry Counties, and
Charlotte [County].
3.
I will not during the term of my employment with
Employer and for two (2) years thereafter, individually
or in combination with any Competitor, market, produce,
solicit orders, sell, deliver, or provide any product,
process, or service which resembles or competes with a
product, process or service with which I was involved in
any capacity while employed by Employer to any Active
Customer or Prospect.
4. I will not, directly or indirectly, during the term
of my employment and for a period of two (2) years
thereafter hire, recruit, solicit or encourage any
employee or independent contractors of Employer to leave
the employ of Employer or to accept employment
elsewhere.1
(Doc. #17, Exh. #3.)

1

ThyssenKrupp cites to this provision of the Employment
Agreement in its motion, but fails to address it further.
-2-

Hubbard continued his employment with GESS and ThyssenKrupp
until he resigned on December 7, 2012.

At the time of his

resignation, Hubbard held the position of service manager for an
area encompassing Lee County, Collier County, Hendy County, and
Charlotte County.
evaluated

the

As a service manager, Hubbard assisted with and

work

performed

by

the

technicians

under

his

supervision and occasionally assisted customers with decisions
regarding repairs and modernization.
After

leaving

ThyssenKrupp,

Hubbard

intended

to

start

a

consulting company called JR Consulting Services. As a consultant,
Hubbard

planned

on

assisting

clients

with

modernizations

by

identifying the required equipment, advertising and collecting
bids, and overseeing the project once a bid was awarded.

Hubbard

needed help starting his company so he contacted John Atherton, a
former employee of GESS.

Atherton agreed to help and allowed

Hubbard to “hang” his Elevator Inspection license with his company,
General

Elevator

Solutions

LLC

(GES).2

Shortly

thereafter,

Atherton hired Hubbard has a mechanic to help him get on his feet.
On December 18, 2012, Hubbard, in an attempt to generate
business for JR Consulting Services, performed a free service audit
for Palmas Del Sol, a condominium serviced by ThyssenKrupp.

2

The

After starting GES in April 2012, Atherton used the
relationships he developed while employed by GESS to acquire
customers, some of whom were previously associated with
ThyssenKrupp.
-3-

lead for the service audit came from Palmas Del Sol’s association
manager, Charles Rod Middleton.

Palmas Del Sol ultimately decided

not to renew its contract with ThyssenKrupp and now receives its
service from GES. Since that time, Middleton’s management firm has
been recommending GES to all of its clients that have the ability
to

switch

vendors.

Furthermore,

Middleton

stated

that

the

decisions to leave ThyssenKrupp were based on failing relationships
and had nothing to do with Hubbard.
Hubbard performed another free service audit on January 14,
2013, at Steamboat Bend East.

Atherton provided Hubbard with the

lead for this audit after he was contacted by its association
manager,

Grant

Gorski.

Steamboat

Bend

East

worked

with

ThyssenKrupp to resolve a majority of the problems identified in
the service

report

provided

by

Hubbard

and continues

to

use

ThyssenKrupp for its elevator service.
The free service audits did not generate any business for JR
Consulting Services and it has yet to make any money.

Hubbard

never incorporated JR Consulting Services and is currently working
as a mechanic at GES.
ThyssenKrupp believes that Hubbard is violating the Employment
Agreement

by

competing

with

ThyssenKrupp

in

the

prohibited

counties, directly or indirectly soliciting ThyssenKrupp’s clients
and prospects to do business with GES, and aiding, abetting, and
assisting others to solicit ThyssenKrupp’s clients and prospects to

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cease and refrain from doing business with ThyssenKrupp.
II.
ThyssenKrupp seeks a preliminary injunction and a permanent
injunction against Hubbard. Plaintiff’s Verified Amended Complaint
assets claims for injunctive relief (Count I), breach of the
Employment

Agreement

(Count

II),

tortious

interference

with

business relations (Count III), unfair competition (Count IV), and
violation of the Florida Deceptive and Unfair Trade Practices Act
(FDUTPA) (Count V).
Plaintiff is not entitled to a permanent injunction unless it
prevails on the case; therefore, that relief is premature and is
denied.

The standard for issuance of a preliminary injunction is

well established:
Under the familiar four-part test, a preliminary
injunction is warranted if the movant demonstrates “(1)
a substantial likelihood of success on the merits of the
underlying case, (2) the movant will suffer irreparable
harm in the absence of an injunction, (3) the harm
suffered by the movant in the absence of an injunction
would exceed the harm suffered by the opposing party if
the injunction is issued, and (4) an injunction would not
disserve the public interest.
Odebrecht Const., Inc. v. Secretary, Florida Dept. of Transp., 715
F.3d 1268, 1273 (11th Cir. 2013) (citing Grizzle v. Kemp, 634 F.3d
1314, 1320 (11th Cir. 2011)).

“[A] preliminary injunction is an

extraordinary and drastic remedy not to be granted unless the
movant clearly establishes ‘the burden of persuasion’ as to each of
the four prerequisites.”

Siegel v. LePore, 234 F.3d 1163, 1176

-5-

(11th Cir. 2000) (quoting All Care Nursing Serv., Inc. v. Bethesda
Mem’l Hosp., Inc., 887 F.2d 1535, 1537 (11th Cir. 1989)).

A

plaintiff may support its motion for a preliminary injunction by
setting forth allegations of specific facts in a verified complaint
or accompanying affidavits. Local Rule 4.05(b)(2). In considering
a motion for preliminary injunctive relief, a district court may
rely

on

affidavits

and

hearsay

materials

that

would

not

be

admissible as evidence for the entry of a permanent injunction.
Levi Strauss & Co. v. Sunrise Int’l Trading Inc., 51 F.3d 982, 985
(11th Cir. 1995).
A.

Substantial Likelihood of Success on the Merits
The

first

factor

in

determining

whether

a

preliminary

injunction should issue is whether the plaintiff is likely to
prevail on the merits of its claims.

ThyssenKrupp asserts that it

is likely to prevail on the following claims: breach of the
Employment

Agreement,

tortious

interference

with

business

relations, and violation of the FDUTPA.
1.

Breach of the Employment Agreement
i.

Standing to Enforce the Employment Agreement

The threshold issue in this claim is the standing of plaintiff
to enforce the Employment Agreement signed by defendant with
defendant’s former employer.

The chronology is as follows:

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On August 21, 2007, Hubbard signed the Employment Agreement
with his former employer GESS.

This is the non-compete agreement

plaintiff is attempting to enforce.
In September 2011, Elevator Service Holding Company, LLC, the
holding company which owned the GESS stock, sold its stock to
ThyssenKrupp Elevator Americas Corporation pursuant to a Stock
Purchase Agreement (submitted under seal).

Plaintiff initially

asserted a right to enforce the Employment Agreement pursuant to
this Stock Purchase Agreement.

(Doc. #17, p. 2.)

The September 7,

2011, Stock Purchase Agreement lists Elevator Service Holding
Company,

LLC’s

existing

material

contracts,

but

Hubbard’s

Employment Agreement with GESS was not included.
After

oral

argument

on

the

motion

for

a

preliminary

injunction, plaintiff withdrew its reliance on the Stock Purchase
Agreement as the basis for its standing.

(Doc. #45, p. 4 n.1.)

Plaintiff recognized that the holding company’s stock was purchased
by its parent company, ThyssenKrupp Elevator Americas Corporation,
not plaintiff ThyssenKrupp Elevator Corporation.

Plaintiff now

relies upon a subsequent merger between GESS and itself as the
source of its standing.
On December 12, 2011, an Agreement of Merger (Doc. #45, Exh.
#1) merged several companies, including GESS, with ThyssenKrupp
Elevator

Corporation,

which

was

the

surviving

company.

The

Agreement of Merger provided in part that “[t]he Surviving Company

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shall succeed to all of the Merging Companies’ properties and
assets and . . . .”
Hubbard

(Doc. #45, Exh. #1, Article 2.2.)

asserts

that

his

Employment

Agreement

was

not

transferred along with the stock to ThyssenKrupp Elevator Americas
Corporation, resulting in its exclusion from the merger between
GESS and plaintiff.

Thus, defendant argues that plaintiff has no

standing to enforce the Employment Agreement. The Court disagrees.
The Stock Purchase Agreement, which omitted reference to the
Employment Agreement, sold stock in GESS’s holding company, not the
assets of either the holding company or GESS.

Whatever the

ramifications of the omission of Hubbard’s Employment Agreement
between

those

parties,

the

omission

does

enforceability of the Employment Agreement.

not

impact

the

The merger included

all assets of GESS, whether disclosed in a prior transaction or
not.

Therefore, the Court finds plaintiff has standing to seek

enforcement of Hubbard’s Employment Agreement.
ii.

Enforceability of the Employment Agreement

Under Florida law, a party seeking to enforce a restrictive
covenant must

prove

the

existence

of

one

or

more

legitimate

business interests justifying the restrictive covenant and that the
contractually
protect

those

specified

restraint

legitimate

business

is

reasonably

interests.

necessary
Fla.

Stat.

to
§

542.335(1)(b)-(c). The opposing party then has the burden to prove
that the restraint is “overbroad, overlong, or otherwise not

-8-

reasonably necessary to protect the established legitimate business
interest or interests.”

Fla. Stat. § 542.335(1)(c).

The term

“legitimate business interests” includes, but is not limited to:
trade secrets;

valuable

confidential

business

or

professional

information that does not qualify as a trade secret; substantial
relationships with specific prospective or existing customers;
client goodwill; and extraordinary or specialized training.

Fla.

Stat. § 542.335(1)(b).
ThyssenKrupp asserts that the restrictive covenants contained
in the Employment Agreement were designed to protect its legitimate
business interests.

ThyssenKrupp identified three such interests:

“the goodwill generated by ThyssenKrupp with its clients, the
substantial relationships developed with those clients, and the
confidential information compiled by ThyssenKrupp and shared with
Hubbard during the course of his employment.”

(Doc. #17, p. 9.)

Client goodwill associated with a specific geographic location
or a specific trade area is recognized as a legitimate business
interest.

Fla. Stat. § 542.335(1)(b)(4).

identify any

facts

or

evidence

in

Plaintiff has failed to

support of

its

assertion.

Therefore, it does not appear substantially likely at this time
that ThyssenKrupp will be able to establish a legitimate business
interest in client goodwill.
ThyssenKrupp alleges that Hubbard was privy to confidential
business information including customer lists, the names of key

-9-

individuals

within

the

organization

of

customers,

customer

contracts, contract anniversary dates, profit and loss information,
and the profitability of accounts.

Hubbard, however, denies this

allegation. An employer may have a legitimate business interest in
the

confidential

information

shared

with

a

former

employee.

“Information that is commonly known in the industry and not unique
to the allegedly injured party is not confidential and is not
entitled to protection.” Autonation, Inc. v. O’Brien, 347 F. Supp.
2d 1299, 1304 (S.D. Fla. 2004).

However, “when an employee has

access to confidential business information crucial to the success
of an employer’s business, that employer has a strong interest in
enforcing a covenant not to compete.”

Proudfoot Consulting Co. v.

Gordon, 576 F.3d 1223, 1234 (11th Cir. 2009).
While

the

Court

is

unable

to

determine

exactly

what

information Hubbard was privy to while employed by ThyssenKrupp, it
appears that most of the “confidential information” identified in
the Verified Complaint can be obtained from other sources.

For

example, customer names and contact information can be obtained
from

association

managers

or

individuals

like

John

Atherton.

Furthermore, Grant Gorski and Charles Rod Middleton stated that
they

showed

ThyssenKrupp.

John

Atherton

their

clients’

contracts

with

(Doc. #33, Exh. #2, p. 2; Doc. #35, Exh. #1, p. 2.)

Because ThyssenKrupp has failed to present any evidence showing
that Hubbard was privy to information unique to its business or

-10-

crucial to its success, the Court cannot conclude that ThyssenKrupp
has met

its

burden of

showing

confidential

information

as

a

legitimate business interest. See Anich Indus., Inc. v. Raney, 751
So. 2d 767, 771 (Fla. 5th DCA 2000).
Finally, ThyssenKrupp claims that the relationships developed
with its clients are legitimate business interests.
this

claim,

plaintiff

must

show

relationships with specific clients.
see also Anich, 751 So. 2d at 771.

that

it

has

To support
substantial

Fla. Stat. § 542.335(1)(b);

The Court concludes that it is

substantially likely that ThyssenKrupp will be able to establish a
legitimate business interest in its client relationships.

The

evidence shows that Hubbard performed service audits for two of
ThyssenKrupp’s customers, one of whom left ThyssenKrupp for GES,
and the affidavit of Grant Gorski states that he currently manages
six associations with elevators and all of them have contracted
with ThyssenKrupp for their service needs.

Such evidence is

sufficient to establish a legitimate business interest in client
relationships.

See Environmental Srvs., Inc. v. Carter, 9 So. 3d

1258, 1266 (Fla. 5th DCA 2009) (holding that active relationships
with

customers

constitute

a

legitimate

business

interest).

Accordingly, plaintiff has met its burden of establishing at least
one legitimate business interest supporting the enforceability of
the Employment Agreement.

-11-

iii.
In

Breach of the Employment Agreement

order

to

prevail

on

this

element,

there

must

be

a

substantial likelihood that ThyssenKrupp will prove that Hubbard
breached

the

Employment

Agreement.

Hubbard

contends

that

Employment Agreement has not been breached because he is not
providing any product, process, or service that he was providing
while employed by ThyssenKrupp. Alternatively, Hubbard argues that
if the Court determines he did breach the Employment Agreement, he
should not be precluded from working for GES because it is not
harmful to ThyssenKrupp’s legitimate business interests.
Restrictive
providing

covenants

reasonable

are

to

protection

be

to

construed
all

in

legitimate

favor

of

business

interests established by the person seeking enforcement and must
not be construed narrowly, against the restraint, or against the
drafter of the contract.
restrictive

covenants

Fla. Stat. § 542.335(1)(h).

contained

in

the

Employment

Here, the
Agreement

prohibit Hubbard from marketing, producing, soliciting, selling,
delivering, or providing any product, process, or service which
resembles or competes with any product, process, or service with
which

he

was

ThyssenKrupp.

involved

in

any

(Doc. #17, Exh. #1.)

capacity

while

employed

by

The covenant does not rely on

the position or job title held by the employee as Hubbard suggests;
rather, it focuses on the employee’s involvement in the product,
process, or service at issue.

-12-

The

excerpts

supervised,

from

assisted,

and

Hubbard’s

deposition

evaluated

elevator

show

that

he

maintenance,

and

occasionally worked with customers on decisions about repairs and
modernization while employed by ThyssenKrupp.

(Doc. #38, pp. 12-

13, 28-29, 32.) Following his departure from ThyssenKrupp, Hubbard
provided service evaluations for two of ThyssenKrupp’s customers,
attempted to solicit work as a consultant regarding modernization,
and currently works as a mechanic for GES in the prohibited
counties.

(Doc. #38, pp. 37, 45, 72.)

Based on this evidence, the

Court finds a substantial likelihood Hubbard is in breach of the
Employment Agreement.
Hubbard contends that an injunction prohibiting him from
acting as a mechanic is not reasonably necessary to protect any of
ThyssenKrupp’s alleged business interests.

A restrictive covenant

cannot be used as a tool simply to eliminate competition and may be
unreasonable if it inflicts an unduly harsh or unnecessary result
upon the employee.

Edwards v. Harris, 964 So. 2d 196, 197 (Fla.

1st DCA 2007) (citations omitted).

Accordingly, the employee can

only be restricted from engaging in activities “harmful to the
legitimate business interest” of the former employer.

Id.

The

suggests

that

Court agrees with Hubbard.
Nothing

in

the

evidence

before

the

Court

ThyssenKrupp’s legitimate business interest in client relationships
will be harmed if Hubbard is allowed to work as a mechanic.

-13-

In

fact, Charles Rod Middleton stated that a number of his customers
left ThyssenKrupp for GES because of failing relationships and
their decisions had nothing to do with Hubbard.
#1,

p.

3.)

Accordingly,

the

Court

finds

(Doc. #35, Exh.

that

it

would

unreasonable to enjoin Hubbard from acting as a mechanic.

be
See

Edwards, 964 So. 2d at 198 (holding that a covenant preventing the
defendant from working with a competitor in any capacity was
unreasonable).

In conclusion, the Court finds that ThyssenKrupp

has shown a substantial likelihood of success on its claim for
breach of the Employment Agreement, except for work as a mechanic.
2.

Tortious Interference with Business Relations
A claim for tortious interference requires “(1) the existence

of a business relationship; (2) knowledge of the relationship on
the part of the defendant; (3) an intentional and unjustified
interference with the relationship by the defendant; and (4) damage
to the plaintiff as a result of the breach of the relationship.”
Gossard v. Adia Servs., Inc., 723 So. 2d 182, 184 (Fla. 1998).
Hubbard contends that ThyssenKrupp failed to meet its burden on the
first and third elements.
A “business relationship,” for purposes of the first prong,
does not require a contractual agreement, but does require a
relationship with a particular party.

Dunn v. Air Line Pilots

Ass’n, 193 F.3d 1185, 1191 (11th Cir. 1999).

As previously

discussed, it is clear that ThyssenKrupp has contractual agreements

-14-

with particular parties; therefore, ThyssenKrupp has met its burden
on this element.
To prove interference, ThyssenKrupp must show that Hubbard
intentionally induced or caused a breach or termination of a
business relationship or expectancy.

Anthony Distribs., Inc. v.

Miller Brewing Co., 941 F. Supp. 1567, 1572 (M.D. Fla. 1996).

The

evidence shows that Palmas Del Sol terminated its relations with
ThyssenKrupp

following

Hubbard’s

audit,

but

Hubbard

presented

evidence showing that the contract was not renewed because of a
failing relationship.

Because there is no additional evidence

supporting the third element, ThyssenKrupp has failed to show a
substantial likelihood of success on this claim.
3.

Violation of the FDUTPA
The FDUTPA broadly declares unlawful any unfair methods of

competition or deceptive acts or practices committed in the conduct
of any trade or commerce.

Fla. Stat. § 501.204(1).

A claim for

damages under the FDUTPA has three elements: “(1) a deceptive act
or unfair practice; (2) causation; and (3) actual damages.”

City

First Mortg. Corp. v. Barton, 988 So. 2d 82, 86 (Fla. 4th DCA 2008)
(citing Rollins, Inc. v. Butland, 951 So. 2d 860, 869 (Fla. 2d DCA
2006)).

“A

established

practice
public

is

policy,

unfair
is

under

immoral,

FDUTPA

if

unethical,

it

offends

oppressive,

unscrupulous, or substantially injurious to consumers.”

Furmanite

America, Inc. v. T.D. Williamson, Inc., 506 F. Supp. 2d 1134, 1145

-15-

(M.D. Fla. 2007) (citing Surris v. Gilmore Liquidating, Inc., 651
So. 2d 1282, 1283 (Fla. 3d DCA 1995)).
Here, ThyssenKrupp alleges, upon information and belief, that
Hubbard is deceiving ThyssenKrupp’s customers by posing as an
independent

inspector

employer, GES.

with

the

intent

of luring

them

to

his

The record, however, is completely void of any

evidence supporting such beliefs. Accordingly, the Court concludes
that ThyssenKrupp did not meet the persuasion as to this claim.
B.

Irreparable Harm
In Florida, “[t]he violation of an enforceable restrictive

covenant creates a presumption of irreparable injury to the person
seeking enforcement of a restrictive covenant.”
542.335(1)(j).

Fla. Stat. §

See also Proudfoot, 576 F.3d at 1231.

presumption, however, is rebuttable.

This

JonJuan Salon, Inc. v.

Acosta, 922 So. 2d 1081, 1084 (Fla. 4th DCA 2006).

As discussed

above, plaintiff has shown a substantial likelihood that Hubbard
breached the Employment Agreement by performing service audits and
attempting to solicit work as a consultant regarding modernization.
Hubbard has made no attempt to rebut the presumption of irreparable
harm; therefore, the Court concludes that the presumption applies.
C.

Balance of the Harm to the Parties
The Court also finds that the potential injury to ThyssenKrupp

outweighs whatever damage an injunction may cause Hubbard.

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JR

Consulting Services has not generated any income or business and
has all but been abandoned by Hubbard.
D.

Public Interest
Here, there is no evidence that a preliminary injunction would

be adverse to the public interest.

It would be in the public

interest to enter a preliminary injunction in this action as the
Court has found a substantial likelihood of success on the merits
and it is in the public’s interest to uphold the law.
Accordingly, it is now
ORDERED:
I. ThyssenKrupp Elevator’s Amended Motion for Preliminary and
Permanent Injunctive Relief (Doc. #17) is GRANTED in part and
DENIED in part.
A.

ThyssenKrupp’s request for permanent injunctive relied is

DENIED.
B.

ThyssenKrupp’s request for preliminary injunctive relief

is GRANTED as follows:
(1)
Defendant Larry Hubbard is hereby preliminarily
enjoined and restrained from acting as a competitor to
TyssenKrupp regarding customers and/or prospective
customers within the following geographical area: Lee
County, Collier County, Hendry County, and Charlotte
County.
(2)
Defendant Larry Hubbard is hereby preliminarily
enjoined and restrained from marketing, producing,
soliciting, selling, delivering, or providing any
product, process, or service which resembles or competes
with any product, process, or service with which he was

-17-

involved in any capacity while employed by ThyssenKrupp,
but is not enjoined from working as a mechanic.
(3) This preliminary injunction shall remain in effect
until December 7, 2014.
DONE AND ORDERED at Fort Myers, Florida, this
November, 2013.

Copies:
Counsel of record

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4th

day of