MAINLINE INFORMATION SYSTEMS INC v. NORTHCOTT

Filing 162

Amended preliminary injunction. Signed by JUDGE ROBERT L HINKLE on 7/20/13. (RH)

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IN THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF FLORIDA
TALLAHASSEE DIVISION

MAINLINE INFORMATION
SYSTEMS, INC.,
Plaintiff,
v.

CONSOLIDATED CASE
NO. 4:12cv247-RH/CAS

TAD C. NORTHCOTT et al.,
Defendants.
______________________________/

AMENDED PRELIMINARY INJUNCTION

The plaintiff Mainline Information Systems, Inc., has moved for a
preliminary injunction prohibiting five former employees, their new employer—
Sirius Computer Solutions, Inc.—and another Sirius employee from soliciting
customers and using confidential information in violation of agreements the former
employees entered with Mainline. This order confirms and in some respects adds
to the ruling announced on the record granting a preliminary injunction against six
of the seven defendants.

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I
The plaintiff Mainline and the defendant Sirius are competitors who market
sophisticated computer products and services. The individual defendants include
five former Mainline employees: Tad C. Northcott, Brian T. Hamill, David
Schafer, Erin F. Rinner, and Lisa Seider. Each left Mainline and immediately went
to work for Sirius. Mr. Schafer’s last day at Mainline was September 22, 2011.
Mr. Hamill’s last day was October 21, 2011. Mr. Northcott’s last day was October
31, 2011. Ms. Rinner’s and Ms. Seider’s last day was December 31, 2011. The
other individual defendant is Sirius’s senior vice president for sales, Jimmy D.
Fordham. Mr. Fordham’s motion to dismiss for lack of personal jurisdiction is
pending; no ruling has been made that this action may go forward against him.
Each former Mainline employee had an employment agreement that
included six provisions of significance here. For convenience, this order quotes
and cites Mr. Northcott’s agreement. The others were analogous.
First, the agreement required the employee to devote the employee’s “entire
business time and energy to the furtherance of the business of [Mainline].” ECF
No. 74-1 at ¶ 2.
Second, the agreement prohibited the employee from disclosing Mainline’s
trade secrets, for as long as they remain trade secrets under applicable law,
“[e]xcept in the performance of services for [Mainline].” Id. at ¶¶ 6.A. & 6.B.

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Third, the agreement prohibited the employee from disclosing Mainline’s
“Confidential Information” during the employment and for two years after the
employment ended. Id. at ¶ 6.B. The agreement defined “Confidential
Information” to include “[i]nformation regarding [Mainline’s] customers which
Employee acquired as a result of his employment with[Mainline], including, but
not limited to, customer contracts, work performed for customers, customer
contacts, customer requirements and needs, data used by [Mainline] to formulate
customer bids, customer financial information, and other information regarding the
customer’s business.” Id. at ¶ 6.D.
Fourth, the agreement prohibited the employee, during the employment and
for one year after the employment ended, from directly or indirectly soliciting any
Mainline customer or prospect with whom the employee had contact, or any
representative of such a customer or prospect, “with a view to selling or providing”
a deliverable or service competitive with Mainline. Id. at ¶ 7. The parties have
agreed that the provision applied only to contacts within the last year of the
employee’s time at Mainline.
Fifth, the agreement prohibited the employee, during the employment and
for one year after the employment ended, from soliciting for employment at a
competing business anyone who worked for Mainline during the employee’s last
year there. Id. at ¶ 8.

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And sixth, the agreement provided that if the employee violated “any
covenant or agreement in Paragraphs 6, 7, or 8”—these included the terms
described in the four paragraphs of this order preceding this one—“that covenant
or agreement” would “automatically be extended for a period of one (1) year from
the date on which the Employee permanently ceases violation or for a period of
one (1) year from the date of entry by a court of competent jurisdiction a final
order or judgment enforcing such covenant, whichever period is later.” Id. at
¶ 9.C. Despite the reference to “whichever period is later,” this order assumes that
an injunction could not properly extend the period beyond the applicable one- or
two-year period (from the date of the employee’s termination) or additional oneyear period (from the date violations permanently ceased).
II
As a prerequisite to a preliminary injunction, a plaintiff must establish a
substantial likelihood of success on the merits, that it will suffer irreparable injury
if the injunction does not issue, that the threatened injury outweighs whatever
damage the proposed injunction may cause a defendant, and that the injunction will
not be adverse to the public interest. See, e.g., Charles H. Wesley Educ. Found.,
Inc. v. Cox, 408 F.3d 1349, 1354 (11th Cir. 2005); Siegel v. LePore, 234 F.3d
1163, 1176 (11th Cir. 2000) (en banc). I find that Mainline has met each of these
criteria.

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Even a permanent injunction must be carefully matched to the violation that
led to issuance of the injunction. See, e.g., Winter v. Natural Res. Def. Council,
Inc., 555 U.S. 7, 32-33 (2008). Mainline has established that it is likely to prevail
on its claim that the defendants have committed specific violations. This order
enters a preliminary injunction that will prevent irreparable harm from further
violations of the same kind while the litigation goes forward. Mainline has sought
a preliminary injunction with more extensive provisions but has failed to establish
a likelihood of success on claims broad enough to support the more extensive
provisions or has failed to establish that the more extensive provisions are
necessary to prevent irreparable harm while the litigation goes forward.
III
The record establishes that each former-employee defendant violated ¶ 6.D.
of the defendant’s employment agreement with Mainline by using or disclosing
Mainline’s confidential information to help Sirius compete with Mainline. See,
e.g., ECF No. 61-3 at 79 (Northcott & Schafer); ECF No. 96-5 at 220-221
(Northcott & Schafer); ECF No. 1-12 (Hamill) (Case No. 4:12-cv-452); ECF No.
1-6 (Rinner) (Case No. 4:12-cv-529); ECF Nos. 1-5, 1-11 (Seider) (Case No. 4:12cv-529). Unless enjoined, the violations are likely to continue. Further improper
use or disclosure of the confidential information is likely to cause irreparable harm

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to Mainline. The balance of harms and public interest favor issuance of a
preliminary injunction.
The record establishes that Mr. Northcott repeatedly violated ¶ 7 of his
employment agreement by directly or indirectly soliciting Mainline customers or
prospects with whom he had contact during his last year at Mainline. See, e.g.,
ECF No. 61-4 at 25, 27 (direct); ECF Nos. 61-3 at 79, 81, 87, 109-110; 61-4 at 18
(indirect). Sometimes he used others to “front” the solicitations while he worked
in the background. See, e.g., ECF Nos. 61-2 at 24; 61-5 at 47. At least once, Mr.
Northcott “massag[ed]” his “internal definition” of his prohibited contacts,
allowing him to contact past customers he initially recognized as prohibited. See
ECF No. 96-5 at 257-58. And Mr. Northcott has testified that when the one-year
anniversary of his departure from Mainline passed, he no longer believed he was
subject to any limit on his solicitation of customers or prospects with whom he had
contact at Mainline, and thus began soliciting those customers without restrictions.
ECF No. 96-5 at 231.
The one-year anniversary plainly did not end Mr. Northcott’s duty not to
solicit those customers, because Mr. Northcott had breached the nonsolicitation
clause during the year. Under ¶ 9.C. of the employment agreement, the
nonsolicitation duty continues for one year after the last violation. A reasonable
inference from Mr. Northcott’s own testimony is that he began unrestricted

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solicitations of the prohibited customers on the one-year anniversary and has
continued unabated. Unless enjoined, Mr. Northcott is likely to continue the
solicitations. Further improper solicitations are likely to cause irreparable harm to
Mainline. The balance of harms and public interest favor issuance of a preliminary
injunction.
The record establishes that the former-employee defendants and Mr.
Fordham, on behalf of Sirius, cooperated with one another in a substantial number
of violations of the employment agreements. See, e.g., ECF Nos. 61-2 at 24
(Northcott & Fordham); 61-3 at 79 (Northcott & Schafer); 61-4 at 14-15 (Northcott
& Schafer); 61-4 at 32 (Hamill & Northcott); 61-5 at 47 (Northcott & Schafer); 969 at 73, 89 (Northcott & Fordham); 96-9 at 118 (Seider, Rinner, Hamill, &
Northcott); 96-9 at 125-127 (Northcott & Hamill). There was a joint effort among
all the defendants to benefit from the improper use and disclosure of Mainline’s
confidential information and to assist in the improper solicitation of customers.
See, e.g., ECF Nos. 61-2 at 24 (Northcott & Fordham); 61-3 at 79 (Northcott &
Schafer); 61-4 at 29-30 (Northcott & Schafer); ECF No. 1-12 (Hamill) (Case No.
4:12-cv-452); ECF Nos. 1-6 (Rinner), 1-11(Seider) (Case No. 4:12-cv-529).
Unless enjoined, the cooperation in the violations is likely to continue. Further
violations, and cooperation in them, are likely to cause irreparable harm to

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Mainline. The balance of harms and public interest favor issuance of a preliminary
injunction.
IV
Based on the findings summarized in this order and on the entire record, the
employment agreements, and the applicable law,
IT IS ORDERED:
1.

Mainline’s preliminary-injunction motions, ECF Nos. 61 & 75, are

GRANTED IN PART and DENIED IN PART. A preliminary injunction is
entered on the terms set out below.
2.

Tad C. Northcott must not directly or indirectly solicit, or assist any

other person in soliciting, any of these entities:
A. BCT;
B. DOD-DHSS-JMLFDC;
C. DOD-Medical;
D. Haemonetics;
E. U.S. Department of the Navy—Navy Engineering Logistics Office;
F. U.S. Department of the Navy—Naval Academy; and
G. U.S. Department of the Navy—JPMIS.

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3.

Mr. Northcott must not directly or indirectly solicit, or assist any other

person in soliciting, any unit with which he dealt during his last year at Mainline
from any of these entities:
A. DOD-Defense Information Service Agency;
B. DOD-Pentagon;
C. DOD-MHSCS-DMLSS;
D. Lockheed Martin;
E. Northrop Grumman;
F. U.S. Department of the Navy—Naval Undersea Warfare Center
Keyport; and
G. U.S. Department of the Navy—SPAWAR.
A “unit” is an office within an entity that recommends or finally approves the
selection of a product or service of the kind marketed by Mainline or Sirius. A unit
may be a purchasing office, an information-technology office, an end-user office,
or an office that combines more than one of these functions.
4.

Mr. Northcott must not directly or indirectly solicit or assist in

soliciting any person acting on behalf of any of the entities or units that he is
prohibited from contacting under paragraphs 2 or 3.
5.

Brian T. Hamill must not assist Mr. Northcott or work together with

Mr. Northcott in any way in connection with any direct or indirect solicitation of

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any entity listed in paragraph 2 or any unit listed in paragraph 3 that the enjoined
defendant knows Mr. Northcott dealt with during his last year at Mainline. Mr.
Hamill must not assist Mr. Northcott or work together with Mr. Northcott in any
way in directly or indirectly soliciting any person acting on behalf of any of the
same entities or units.
6.

David Schafer must not assist Mr. Northcott or work together with

Mr. Northcott in any way in connection with any direct or indirect solicitation of
any entity listed in paragraph 2 or any unit listed in paragraph 3 that Mr. Schafer
knows Mr. Northcott dealt with during his last year at Mainline. Mr. Schafer must
not assist Mr. Northcott or work together with Mr. Northcott in any way in directly
or indirectly soliciting any person acting on behalf of any of the same entities or
units.
7.

Erin F. Rinner must not assist Mr. Northcott or work together with

Mr. Northcott in any way in connection with any direct or indirect solicitation of
any entity listed in paragraph 2 or any unit listed in paragraph 3 that Ms. Rinner
knows Mr. Northcott dealt with during his last year at Mainline. Ms. Rinner must
not assist Mr. Northcott or work together with Mr. Northcott in any way in directly
or indirectly soliciting any person acting on behalf of any of the same entities or
units.

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8.

Lisa Seider must not assist Mr. Northcott or work together with Mr.

Northcott in any way in connection with any direct or indirect solicitation of any
entity listed in paragraph 2 or any unit listed in paragraph 3 that Ms. Seider knows
Mr. Northcott dealt with during his last year at Mainline. Ms. Seider must not
assist Mr. Northcott or work together with Mr. Northcott in any way in directly or
indirectly soliciting any person acting on behalf of any of the same entities or units.
9.

Sirius Computer Solutions, Inc. must not assist Mr. Northcott or work

together with Mr. Northcott in any way in connection with any direct or indirect
solicitation of any entity listed in paragraph 2 or any unit listed in paragraph 3 that
Sirius knows Mr. Northcott dealt with during his last year at Mainline. Sirius must
not assist Mr. Northcott or work together with Mr. Northcott in any way in directly
or indirectly soliciting any person acting on behalf of any of the same entities or
units.
10.

Mr. Northcott must not use or disclose information regarding

Mainline Information Systems, Inc.’s customers that Mr. Northcott, Mr. Hamill,
Mr. Schafer, Ms. Rinner, or Ms. Seider acquired as a result of employment with
Mainline, including, but not limited to, customer contracts, work performed for
customers, customer contacts, customer requirements and needs, data used by
Mainline to formulate customer bids, customer financial information, and other
information regarding the customer’s business.

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11.

Mr. Hamill must not use or disclose information regarding Mainline

Information Systems, Inc.’s customers that Mr. Northcott, Mr. Hamill, Mr.
Schafer, Ms. Rinner, or Ms. Seider acquired as a result of employment with
Mainline, including, but not limited to, customer contracts, work performed for
customers, customer contacts, customer requirements and needs, data used by
Mainline to formulate customer bids, customer financial information, and other
information regarding the customer’s business.
12.

Mr. Schafer must not use or disclose information regarding Mainline

Information Systems, Inc.’s customers that Mr. Northcott, Mr. Hamill, Mr.
Schafer, Ms. Rinner, or Ms. Seider acquired as a result of employment with
Mainline, including, but not limited to, customer contracts, work performed for
customers, customer contacts, customer requirements and needs, data used by
Mainline to formulate customer bids, customer financial information, and other
information regarding the customer’s business.
13.

Ms. Rinner must not use or disclose information regarding Mainline

Information Systems, Inc.’s customers that Mr. Northcott, Mr. Hamill, Mr.
Schafer, Ms. Rinner, or Ms. Seider acquired as a result of employment with
Mainline, including, but not limited to, customer contracts, work performed for
customers, customer contacts, customer requirements and needs, data used by

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Mainline to formulate customer bids, customer financial information, and other
information regarding the customer’s business.
14.

Ms. Seider must not use or disclose information regarding Mainline

Information Systems, Inc.’s customers that Mr. Northcott, Mr. Hamill, Mr.
Schafer, Ms. Rinner, or Ms. Seider acquired as a result of employment with
Mainline, including, but not limited to, customer contracts, work performed for
customers, customer contacts, customer requirements and needs, data used by
Mainline to formulate customer bids, customer financial information, and other
information regarding the customer’s business.
15.

Sirius must not use or disclose information regarding Mainline

Information Systems, Inc.’s customers that Mr. Northcott, Mr. Hamill, Mr.
Schafer, Ms. Rinner, or Ms. Seider acquired as a result of employment with
Mainline, including, but not limited to, customer contracts, work performed for
customers, customer contacts, customer requirements and needs, data used by
Mainline to formulate customer bids, customer financial information, and other
information regarding the customer’s business.
16.

This injunction does not limit the ability of Sirius or any individual

defendant other than Mr. Northcott to solicit the entities or units listed in
paragraphs 2 and 3, so long as the defendant does not assist Mr. Northcott or work

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together with Mr. Northcott in any way in connection with the solicitation and does
not use Mainline’s confidential information in violation of this injunction.
17.

This injunction does not limit any defendant’s ability to disclose

information to a defense attorney in connection with the defense of this lawsuit.
18.

This injunction will take effect when Mainline provides security in the

amount of $50,000 to pay the costs and damages sustained by any party found to
have been wrongfully enjoined or restrained. The security may be provided
through a deposit with the clerk of the court, or an injunction bond issued by an
appropriate entity unrelated to Mainline, or—unless a defendant objects—an
undertaking filed by Mainline that includes a statement substantially in this form:
“Mainline agrees to pay up to $50,000 in costs or damages sustained by parties
found to have been wrongfully enjoined or restrained by the preliminary injunction
entered in this action.”
19.

This injunction will remain in effect until otherwise ordered or until

entry of a final judgment.
20.

This injunction binds the enjoined defendants and their officers,

agents, servants, employees, and attorneys—and others in active concert or
participation with any of them—who receive actual notice of this injunction by

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personal service or otherwise.
SO ORDERED on July 20, 2013.
s/Robert L. Hinkle
United States District Judge

Case No. 4:12cv247-RH/CAS