Moon et al v. Medical Technology Associates, Inc.
Filing
125
ORDER that MTA's request for preliminary injunction is DENIED and further denying as moot 122 Motion to Strike. Signed by Judge Elizabeth A. Kovachevich on 1/30/2015. (SN)
UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
ALFRED MOON, ALFRED MOON, JR.,
CHERYL MOON and MEGAN WHITE,
Plaintiffs/Counter-Defendants,
v.
CASE NO. 8: 13-cv-02782-EAK-EAJ
MEDICAL TECHNOLOGY ASSOCIATES,
INC.,
Defendant/Counter-Claimant.
____________________________________/
ORDER
This cause comes before the Court on remand from the United States Court of Appeals
for the Eleventh Circuit. (Doc. # 60). The Eleventh Circuit vacated the Court’s previous Order
Granting
in
Part
and
Denying
in
Part
Defendant/Counter-Claimant’s,
MEDICAL
TECHNOLOGY ASSOCIATES, INC., (“MTA”) Motion for Preliminary Injunction, (Doc. #
35), and directed the Court to hold an evidentiary hearing on the Motion for Preliminary
Injunction (the “Motion”). (Doc. # 8). After conducting a hearing on the merits of the Motion
from October 28, 2014, through October 29, 2014, accepting testimony and evidence from both
Plaintiffs and Defendant, reviewing the parties’ respective proposed findings of fact and legal
arguments associated therewith, (Docs. ## 119, 121), and considering the testimony and
evidence in light of the burdens associated with obtaining a preliminary injunction, the Motion is
DENIED.
FINDINGS OF FACT
A. The Parties
MTA is a national healthcare compliancy testing, service, and equipment provider, with
offices and service centers located throughout the United States. (Docs. # 119 at 2; # 121 at 2).
MTA provides medical gas pipeline equipment, repairs, and services to numerous businesses in
the healthcare community, as well as system testing and construction certification, preventative
maintenance programs, medical gas pipeline full system repair and service, medical air
compressor and vacuum pump rebuild services, and ventilation surveys of critical care areas,
patient rooms, operating rooms, and laboratories. (Docs. # 119 at 2; # 121 at 2). MTA also
markets and sells medical gas plumbing certification courses. (Docs. # 119 at 2; # 121 at 2).
On July 7, 2008, MTA purchased Moon Medical, Inc.’s (“Moon Medical”) tangible and
intangible assets, including goodwill and its entire list of customers from Mr. Alfred Moon (“Mr.
Moon”) and Mrs. Cheryl Moon (“Mrs. Moon”)—the sole shareholders, directors, and officers at
Moon Medical. (Docs. # 119 at 2; # 121 at 2–3). Mr. and Mrs. Moon, their daughter Megan
White (“Ms. White”), and their son Alfred “Chip” Moon, Jr. (“Mr. C. Moon”) (collectively the
“Respondents”), were all employees of Moon Medical. (Docs. # 119 at 3; # 121 at 3–4). Moon
Medical was a direct competitor of MTA.
As part of this transaction, MTA employed the Respondents: Mr. Moon became regional
manager for MTA’s Midwest region, which included Kansas, Missouri, Nebraska, and Iowa.
(Docs. # 119 at 3; # 121 at 3). MTA later promoted Mr. Moon to director of field development,
which had a national scope. (Docs. # 119 at 3; # 121 at 3). MTA employed Mrs. Moon in an
administrative capacity, in which Mrs. Moon primarily produced reports and answered phones.
(Docs. # 119 at 3; # 121 at 4). Mrs. Moon also worked on project-related work for Blake
Petrunick, then CEO of MTA. (Doc. # 107-3 at 12:7–20). Mrs. Moon had little-to-no contact
with customers. (Doc. # 107-3 at 13:4–13). MTA employed Ms. White as the bid and special
sales/project management, where she handled bidding, inside sales, scheduling, and customer
service. (Docs. # 119 at 3; # 121 at 3–4). MTA initially employed Mr. C. Moon in the position
of field technician for medical gas verifications, and later promoted him to facility sales, in
which he conduct certifications and annual inspections. (Docs. # 119 at 3; # 121 at 3). The
Respondents were responsible for MTA’s Midwest Region, although each individual also
worked for particular longtime customers of Moon Medical. (Docs. # 119 at 3; # 121 at 3).
Mrs. Moon’s employment with MTA ended on May 31, 2010. (Docs. # 119 at 3; # 121
at 4). Mr. Moon, Ms. White, and Mr. C. Moon resigned from MTA employment by October
2013. (Docs. # 119 at 3–4; # 121 at 11).
B. The Respondents’ Agreements
In consideration for MTA’s purchase of Moon Medical, Mrs. Moon executed a contract
with MTA that contained restrictive covenants. (Docs. # 119 at 4; # 121 at 4). In addition to a
confidentiality provision, Mrs. Moon’s agreement provides the following:
2. Non-Compete. … [F]or a period of sixty months following the
termination…of her employment, Employee shall not, directly or
indirectly…render services…to…any person engaged in…any
other business whose products or activities compete in whole or in
part with the business of [MTA] in any county which [MTA] has
sold products or services during the sixty (60) months immediately
preceding the signing of this Agreement (“restricted territory”)….
5.
Non-Solicitation. … Employee…will not, directly or
indirectly, solicit the business of any person known to Employee to
be a customer of [MTA], whether or not Employee had personal
contact with such person, with respect to products or activities
which compete in whole or in part with [MTA].
(Docs. # 119 at 4; # 121 at 4).
Between January 18, 2013, and March 1, 2013, the remaining Respondents—Mr. Moon,
Mr. C. Moon, and Ms. White—entered into employment agreements with MTA that contained
restrictive covenants in consideration for their continued employment and respective promotions.
(Docs. # 119 at 5–7; # 121 at 6–8). The employment agreements provide, in pertinent part:
3.
CONFIDENTIALITY AGREEMENT. Employee…
acknowledges that during the course of his…employment
Employee has had and will continue to have access to confidential
information related to the Employer’s business that Employee
agrees to keep confidential at all times…“Confidential
Information” shall be defined as information of any kind, nature or
description concerning matters affecting or relating to the business
of Employer, …that is not generally available to the
public…Employer and Employee …agree that the protection of
Employer’s Confidential Information is necessary to protect and
preserve the value of Employer’s business and its goodwill, and
that this Confidential Information, if disclosed, could place
Employer at a competitive disadvantage. Therefore, with respect to
this Confidential Information, Employee agrees as follow [sic]:
a. Employee will not, …after the term of his employment:
(i) publish, disclose, or make accessible any Confidential
Information…whether or not such information is embodied
in writing or other physical form or is retained in the
memory of Employee…; or (ii) use or generate benefit
from such information, except during employment with
Employer and for the benefit of Employer….
b. Employee shall return all tangible evidence of such
Confidential Information, …at the termination of
employment with Employer. All…data owned, procured, or
generated by Employer relating to the Confidential
Information identified above, shall remain the exclusive
property of Employer….
4. NON-COMPETE AGREEMENT. Employee agrees that…for
a period of two (2) years…after the termination…of Employee’s
employment with Employer, Employee shall not, directly or
indirectly, …compete against Employer (including but not limited
to engaging in any activity that could have the effect of directing
business away from Employer)…or establish any business
relationship…with any business entity or person in competition
with Employer….
c. Employer and Employee agree that Employer competes
throughout the United States, and Employee
performs…services throughout the States of Kansas,
Missouri, Nebraska, and Iowa and1 in geographical areas of
employment in which Employee has sold products or
services. Employer and Employee agree that the
prohibition on competition applies throughout the States of
Kansas, Missouri, Nebraska, and Iowa in areas in which
Employee sold/serviced Employer’s products or services
and/or serviced Employer’s products during the twentyfour (24) months prior to the termination of Employee’s
employment….2
(Docs. # 119 at 5–7; # 121 at 6–8).
C. MTA’s Confidential Information & Substantial Relationships
As CEO of the company, and in anticipation of the October 28, 2014 hearing, Ms.
Valerie Marks “asked [her team] to pull any customers with substantial relationships that were in
the four state market that came on after [MTA] acquired the Moon’s business.” (Doc. # 96 at
28:20–23). Ms. Marks’ team, presumably, narrowed the list from thousands of customers to
customers with which MTA “had very active and ongoing relationships and customers who had
a high degree of confidence in [MTA]” in an effort “to continue to be more and more fair
because [her team] started with a very large list.” (Doc. # 96 at 29:14–19). Ms. Marks,
however, could not testify to the methodology employed to determine whether MTA had a
substantial relationship with those particular customers. In fact, on cross examination, Ms.
Marks could not testify to the nature of any relationship with any account enumerated on the
customer lists. (Doc. # 96 at 30–34). Of particular interest, the list contained the United States
Federal Government Department of Veterans Affairs, The United States District Court for
Kansas City, the United States District Court for Topeka, and the United States District Court for
Wichita. (Doc. # 96 at 30–34). When pressed, Ms. Marks admitted MTA did not—and could
1
The Court notes the discrepancy between Petitioner’s and Respondent’s proposed findings of fact. After reviewing
the pertinent contracts—specifically, MTA’s Exhibit 16—the Court finds the inclusion of “and” is correct.
2
Both Ms. White’s and Mr. C. Moon’s agreements have the portion reading “in areas in which Employee
sold/serviced Employer’s products or services and/or services Employer’s products during the twenty-four (24)
months prior to the termination of Employee’s employment struck through. (Docs. # 119 at 6; # 121 at 7).
not—have substantial, protected relationships with the Federal Government, and that Mr. Charlie
Brons would be the appropriate MTA representative to testify regarding the methodology of the
list and the relationships with particular customers. (Doc. # 96 at 30–34).
MTA hired Mr. Brons in mid-June of 2013 for the position of Midwest regional manager.
(Doc. # 96 at 40). As Midwest regional manager, Mr. Brons maintained customer relationships
and managed the fourteen-state region from “Arkansas, Oklahoma, up to Wisconsin, a few
accounts in South Dakota, and whatnot…” with his technicians and salespeople. (Doc. # 96 at
40–41). However, Mr. Brons could not testify to the amounts of revenue MTA lost or that the
revenue was diverted to the Respondents. (Doc. # 96 at 80). Throughout his testimony, Mr.
Brons could not identify customer information beyond that on the list, with little exception,
despite holding the title of Midwest regional manager for approximately sixteen (16) months.
The majority of these accounts derived revenue from repeat business. (Doc. # 96 at 45). Mr.
Brons considered these customer relationships substantial and the information needed to
maintain the repeat business confidential; for instance, inspection dates and equipment
eventually due for replacement. (Doc. # 96 at 47–49). However, on cross examination, Mr.
Brons admitted that information was in the possession of the customer, and the customer could
share that information with any other business—either to obtain a lower bid, or even if the
business telephoned the hospital and asked for the inspection date. (Doc. # 96 at 62–63).
Moreover, Mr. Brons admitted that portions of his declaration—one made under penalty
of perjury and upon which this Court relied to grant MTA initial njunctive relief—were not
entirely true. For example, in his declaration, Mr. Brons declared the bid process is closed and
competing companies are not privy to competing bids or bid components, (Docs. ## 9 at 68; 96
at 65); however, on cross examination, Mr. Brons clarified that his declaration was mostly
true—that competitors were not privy to competing bids or bid components, but, under certain
circumstances, some vendors would show competitors the competing bids for a “last look” to
allow the competitor to underbid the competition. (Doc. # 96 at 66). While this section of the
declaration begins with the “usual process by which healthcare facilities obtain medical gas
equipment and/or testing services is through the solicitation of closed bids” from contractors, the
declaration, in light of Mr. Brons’ testimony, misleads the reader; Mr. Brons declared:
The process by which companies, including MTA, submit bids for
medical gas equipment and training is as follows: the companies
develop a quote for equipment and services based on labor and
equipment cost. The bids are then submitted to the customer for
selection. This is a closed bid process where competing companies do
not know one another’s bids or the bid’s components.
(Doc. # 9 at 68) (emphasis added). The declaration fails to demonstrate the relationships
between some entities with respect to the “last look” option in the bidding process, effectively
nullifying Mr. Brons’ declaration that the system is a closed bid process and competitors do not
know one another’s bids or the bid’s components.
The testimony of MTA employee Nancy Hunter was limited, but still failed to explain
satisfactorily the process by which MTA determined the customer lists reflected substantial
relationships with MTA customers and the damages that flowed therefrom—an essential element
of MTA’s causes of action. In certain instances, the customer list reflected Mike Dolack,
Charlie Brons, and other MTA employees were the direct contacts for the accounts—not the
Respondents. (Doc. # 97 at 96–97). The customer list included these amounts, yet Ms. Hunter
could only speculate as to the interactions the Moons may have had with these clients, mostly
based on Mr. Moon’s managerial capacity. (Doc. # 97 at 96–97). Ms. Hunter further testified
the list was not based on revenue, but rather “the fact that it’s an active ongoing relationship”
and the revenue could vary between $1 or $1,000,000. (Doc. # 97 at 100). Ms. Hunter could not
confirm whether the Moons were conducting business with any of the customers on the list
beyond “what’s been produced in the documents.” (Doc. # 97 at 99–100). Ms. Hunter further
admitted she did not know the locations of the customers, but that the customers were located “in
the Midwest region, which…consists of 14 states.” (Doc. # 97 at 99). Ms. Hunter confirmed
Mr. Brons’ testimony that hospitals and clients with which MTA conducts business are not
precluded from disclosing bid and project information—including prices—to MTA’s
competitors. (Doc. # 97 at 91–92). Ms. Hunter testified the Moons “should not be allowed to
conduct business with any cancer care facility within the Midwest region, those 14 states,”
which could be outside the four-state region at issue in this case. (Doc. # 97 at 103).
Ms. Hunter conceded that while a contractor may not have obtained work for a hospital,
such as J.M. Brennan, another contractor could have been awarded that job, and MTA would not
have lost any revenue. (Doc. # 97 at 104–109). Ms. Hunter admitted contractors hire different
individuals and the prices vary depending on the job. (Doc. # 97 at 110). Ms. Hunter confirmed
Mr. Brons’ testimony that MTA is not the only company registered to conduct business with the
Department of Veterans Affairs—an entity with which MTA claimed to have a substantial,
protected relationship. (Doc. # 97 at 114). Ms. Hunter, after repeated questions from opposing
counsel, reluctantly admitted that MTA was not the only entity authorized to conduct medical
gas business with the Department of Veterans Affairs. (Doc. # 97 at 115–116). Ms. Hunter
further admitted MTA competes against companies to earn the business of Rand Construction
Company, another company with which MTA alleges it has a substantial, protected relationship,
and that any individual could likely obtain information for those bids through publicly available
information. (Doc. # 97 at 116–119). Ms. Hunter refused to acknowledge the varying degree of
relationships between one customer that might conduct thousands of dollars of business and
another that historically conducted hundreds of thousands of dollars of business, simply stating
that MTA has a substantial relationship with all customers because at any given time an MTA
customer could decide to build a hospital. (Doc. # 97 at 118–119). Ms. Hunter could only
speculate why J.M. Brennan, Titan Plumbing, and other vendors ceased business with MTA,
noting the business “just vanished” and “the Moons are taking care of those customers now.”
(Doc. # 97 at 80–81).
Deposition testimony of Robert Ross Williams, who is employed with Artech
Environmental, revealed that companies occasionally bid against one another for projects in the
industry, (Doc. # 96 at 218–219), and any competitor could “[o]pen up the yellow pages under
hospitals…[d]rive down the road and look for every blue sign that says H, turn left or right, pull
into the front door, and that’s [a] customer.” (Doc. # 96 at 226–227). The deposition testimony
demonstrated that any individual or business could literally walk into a hospital, speak with an
operations, equipment, or engineering manager, and ask for an appointment or opportunity to
discuss providing services, including annual evaluations and support for new construction at any
particular hospital. (Doc. # 96 at 226–228). The deposition testimony revealed that Artech was
given the “last look” opportunities Mr. Brons described in his testimony—where a hospital or
customer would disclose the lowest bid and offer the project to a competitor if the competitor
underbid the lowest bid, (Doc. # 96 at 229), that the methodology for calculating and producing
a bid varied day-to-day, project-to-project, (Doc. # 96 at 230), and the demands of clients and
the industry fluctuates greatly throughout the year. (Doc. # 96 at 231–232).
Deposition testimony of John Michael Brennan, III, who is the co-president of and
corporate representative for J.M. Brennan, revealed that J.M. Brennan primarily conducted
business with Moon Medical for a number of years, then MTA due to MTA’s acquisition of
Moon Medical and Mr. Moon’s employment with MTA. (Doc. # 97 at 8–10, 16). Mr. Brennan
characterized the relationship with Mr. Moon as longstanding and good. (Doc. # 97 at 10).
After the Respondents departed MTA, Mr. Brennan testified the relationship with MTA “went
down substantially” due to a decreased comfort level and service issues with MTA. (Doc. # 97
at 16–17).
Regarding the service issues, Mr. Brennan elaborated that one MTA employee hired for
gas verification was “out drinking the night before and got drunk and lost his car.” (Doc. # 97 at
21–22). The following morning that MTA employee “was not up in the morning and couldn’t
find his car to get to the hospital to do verifications.” (Doc. # 97 at 22). Mr. Brennan testified
J.M. Brennan did not encounter these issues with other companies’ verifiers, and that MTA’s
employees—save the Respondents—were not cooperative and dynamic in their efforts to address
and satisfy the demands of the industry. (Doc. # 97 at 22–23). Mr. Brennan clarified that J.M.
Brennan’s customers are “best served by having multiple vendors in any area of business, both
from a cost [and service level] standpoint.” (Doc. # 97 at 26).
Deposition testimony of John Just, who is the president of and corporate representative
for Just Service, Inc., confirmed the different types of bids and that not all bids are of a closed
nature, especially new projects. (Doc. # 97 at 37–38). Mr. Just further testified he could not
account for lost revenue between 2012 and 2014, but that Just Service, Inc., performed much less
construction work and projects after 2012. (Doc. # 97 at 35).
Deposition testimony of Albert Mueller, the manager of the plumbing department at Just
Service, Inc., confirmed warranty and equipment issues with MTA, as well as drunk MTA
employees calling at 2:00 in the morning to ask for cab money. (Doc. # 97 at 49–50). Mr.
Mueller further confirmed that Just Service, Inc., has no exclusive relationship with MTA or any
other company for service and equipment needs. (Doc. # 97 at 50–51).
STANDARD OF REVIEW
“A district court may grant injunctive relief only if the moving party shows that: (1) it
has a substantial likelihood of success on the merits; (2) irreparable injury will be suffered unless
the injunction issues; (3) the threatened injury to the movant outweighs whatever damage the
proposed injunction may cause the opposing party; and (4) if issued, the injunction would not be
adverse to the public interest.” Siegel v. LePore, 234 F.3d 1163, 1176 (11th Cir. 2000). “A
preliminary injunction is an extraordinary and drastic remedy not to be granted unless the
movant clearly establishes the ‘burden of persuasion’ as to the four requisites.” All Care
Nursing Serv., Inc. v. Bethesda Mem’l Hosp., Inc., 887 F.2d 1535, 1537 (11th Cir. 1989). A
motion for preliminary injunction is a federal procedural issue derived from Federal Rule of
Procedure 65. Fed. R. Civ. P. 65; see Ferrero v. Associated Materials, Inc., 923 F.2d 1441, 1448
(11th Cir. 1991).
ANALYSIS
Based on the testimony presented at the two-day hearing from October 28, 2014, through
October 29, 2014, this Court cannot find MTA has a substantial likelihood of success on the
merits. MTA’s causes of action are for breach, (Doc. # 5 at 18–25), an essential element of
which is damages. Throughout the two-day hearing and the exhibits presented, MTA’s CEO,
employees, and corporate representatives presented evidence rife with inexplicable
inconsistencies.
CEO Valerie Marks could not explain the methodology to determine the
customer list that MTA contended were substantial relationships, nor how MTA lost business
with those customers, and left that explanation to Charlie Brons and Nancy Hunter. Mr. Brons
and Ms. Hunter, similarly, could not sufficiently explain the methodology employed, nor testify
that the Respondents definitively affected MTA’s revenue in the specific four-state area.
Assuming, arguendo, MTA could establish a likelihood of success on the merits, MTA’s
bid for injunctive relief still fails, as the injury presented through testimony and evidence is
speculative at best. The basic premise MTA advanced was that the Respondents left MTA, and
MTA lost business, therefore it was the misconduct of the Respondents that caused the lost
business. Representatives for J.M. Brennan and Just Services, Inc., testified their relationships
with MTA dwindled not based on the Respondents’ conduct, but rather the decreased level of
service MTA provided after the Respondents departed MTA, and that neither had an exclusive or
protected relationship with MTA. These representatives confirmed the impeached testimony of
Mr. Brons that bidding processes were not always closed, and vendors were given “last looks” in
an effort to best their competitors.
The inconsistent testimony and evidence that failed to establish damages—or even the
information contained in affidavits—combined with the speculative threatened injury to MTA,
do not outweigh the damages the proposed injunction would cause Respondents. Accordingly, it
is ORDERED and ADJUDGED that MTA’s request for preliminary injunction is DENIED.
It is FURTHER ORDERED that MTA’s Motion to Strike (Doc. # 122) is DENIED as moot.
DONE and ORDERED in Chambers, in Tampa, Florida, this 30th day of January, 2015.
Copies to: All parties and counsel of record
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