Herrick et al v. Potandon Produce, LLC et al

Filing 22

MEMORANDUM DECISION AND ORDER DENYING DEFENDANT'S 10 MOTION FOR PRELIMINARY INJUNCTION. It is further ORDERED that the parties submit a stipulated scheduling order for the Courts signature within 14 days. Signed by Judge Brian Ted Stewart. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by (cjs)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF IDAHO
COLETTE HERRICK, JULIENE
ATWOOD, and TEESHA MITCHELL,

MEMORANDUM DECISION AND
ORDER DENYING DEFENDANT’S
MOTION FOR PRELIMINARY
INJUNCTION

Plaintiffs,
v.
POTANDON PRODUCE, LLC, a limited
liability company, KENT M. ROMRELL,
DICK THOMAS, JAMEY HIGHAM,
TRAVIS HESS, MEL DAVENPORT,
STEVE OTTUM and J.P. SURERUS,

Case No. 4:15-CV-00533-TS
District Judge Ted Stewart

Defendants.

This matter is before the Court on Defendant Potandon Produce, LLC’s (“Potandon”)
Motion for a Preliminary Injunction. For the reasons discussed below, the Court will deny
Potandon’s Motion.
I. BACKGROUND
Potandon is a potato and onion broker located in Idaho Falls, Idaho. The company
markets fresh potatoes and onions from local and regional producers to retailers, wholesalers,
and restaurants. Former employees, Colette Herrick, Juliene Atwood, and Teesha Mitchell,
brought claims against Potandon for violation of the Equal Pay Act (“EPA”) and the Fair Labor
Standards Act (“FLSA”). In their Complaint, these three women allege Potandon violated the
EPA when it paid them less than men in their department for doing the same or substantially
similar work. 1 The women also allege that, in violation of the FLSA, they were not paid

1

Docket No. 1, at 3–6.
1

overtime compensation when they worked more than 40 hours per week. 2 Herrick started at
Potandon in 1990 and worked in various capacities until she resigned in July 2015. Before her
resignation, she held the position of Sales Person for approximately twelve years. 3 She started
working for Eagle Eye Produce (“Eagle Eye”) on August 3, 2015, as a Packaging and
Transportation Clerk. Eagle Eye is a produce broker in Idaho Falls, Idaho that markets potatoes,
onion, Nogales vegetables, watermelons, and table grapes grown in ten different states and three
different countries. 4 With its Answer to her Complaint, Potandon filed a Counterclaim against
Herrick for violation of a non-compete agreement (the “Agreement”) that she signed while
employed at Potandon. 5 Potandon alleges that Herrick is in violation of the Agreement and
seeks injunctive relief, 6 and additional damages for breach of contract, breach of the covenant of
good faith and fair dealing, and misappropriation of trade secrets. 7 At issue in this Motion is
only the requested injunctive relief.
On August 11, 2015, Potandon sent a letter to Herrick and Eagle Eye notifying them that
it expected Herrick to honor the Agreement. 8 Herrick indicated her intent to honor the
Agreement and told Potandon that she would not work in a position for Eagle Eye that violated
the Agreement. 9 During September and October of 2015, Herrick and Potandon attempted to

2

Id. at 7.

3

Docket No. 21-2, at 1.

4

Docket No. 10-3, at 18.

5

Docket No. 5, at 9–13.

6

Id. at 14.

7

Id. at 16–19.

8

Id. at 13.

9

Id.
2

resolve their issues over back pay and the Agreement. 10 These discussions were unsuccessful,
and Herrick filed suit on November 11, 2015. 11 She is still employed at Eagle Eye and contends
that the work she does there does not violate the Agreement because it has nothing to do with
sales. 12 Potandon disagrees and is seeking a preliminary injunction barring Herrick from
working at Eagle Eye in her current position or any other position that, in its opinion, violates the
Agreement.
The Agreement states that:
[F]or a period of eighteen (18) months following the termination of such
employment (for any reason, whether voluntary or involuntary), Employee shall
not, directly or indirectly, in any location in the United States in which Potandon
conducts business and in which Employee provided services or had a significant
presence or influence during her employment, engage, become interested in (as a
greater than 10% owner, or stockholder, partner, director, officer, member,
creditor), or act as an employee, contractor, or consultant, in any role involving
the provision of similar (not identical) services, for a business purchasing,
selling/supplying, or handling fresh potatoes or onions, or related services in
competition with Potandon’s Business.
***
During Employee’s employment at Potandon and for a period of eighteen (18)
months after the termination of that employment (for any reason, whether
voluntary or involuntary), Employee shall not, with respect to any business in
competition with Potandon’s Business, for herself or on behalf of any person or
entity, directly or indirectly:
4.1 Attempt, assist, or actually solicit, divert, take away, or advertise to any
customer, co-packer, or other supplier of Potandon or a Potandon affiliate, for
whom Employee performed services, or with whom Employee developed a
relationship, while working on behalf of Potandon or a Potandon affiliate during
her employment with Potandon.
4.2 Recommend to any customer, co-packer, or supplier of Potandon or its
affiliates any business purchasing, selling, or handling fresh potatoes or onions
other than Potandon and its affilates and their respective employees. 13
10

Id.

11

See Docket No. 1.

12

Docket No. 16-1, at 3.

13

Docket No. 10-3, at 7 (emphasis added).
3

II. DISCUSSION
“A plaintiff seeking a preliminary injunction must establish that he is likely to succeed on
the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the
balance of equities tips in his favor, and that an injunction is in the public interest.” 14
A. LIKELIHOOD OF SUCCESS ON THE MERITS
In this case, the Court considers two questions to determine likelihood of success on the
merits: (1) whether the agreement Herrick signed is enforceable, and if so, (2) whether Herrick
has violated it. Historically, Idaho law has disfavored the enforcement of non-compete
agreements in the employment context. “Covenants not to compete in an employment contract
are disfavored and will be strictly construed against the employer.” 15 However, in 2008, the
Idaho legislature passed legislation that declared enforceable such agreements that were made by
an employer with a “key employee” as long as the agreement is “reasonable as to its duration,
geographical area, type of employment or line of business, and does not impose a greater
restraint than is reasonably necessary to protect the employer’s legitimate business interests.” 16
The legislature further instructed an examining court that if it found an agreement “unreasonable
in any respect . . . [to] limit or modify the agreement or covenant . . . [to] render it reasonable . . .
and specifically enforce the agreement as limited or modified.” 17
For the purposes of this Motion, Herrick does not dispute the enforceability of the
Agreement. She only argues that her current employment at Eagle Eye does not violate it.

14

All. for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011) (quoting
Winter v. Nat. Res. Def. Council, 555 U.S. 7, 20 (2008)).
15

Pinnacle Performance, Inc. v. Hessing, 17 P.3d 308, 311 (Idaho Ct. App. 2001).

16

Idaho Code Ann. § 44–2701.

17

Id. § 44–2703.
4

Potandon argues that Herrick’s failure to argue the enforceability of the Agreement is dispositive
to its argument of likelihood of success on the merits. “Since the Agreement is enforceable,
there is a likelihood of success on the merits.” 18 This is not correct. As mentioned above, in
order for Potandon to succeed on the merits of its contract claim, it must prove not only that the
Agreement was valid and enforceable, but that it was actually breached.
Based on the limited evidence presented by Potandon, the Court finds that Potandon has
not shown that it is likely to succeed on the merits of its claim for breach of the Agreement. As
evidence that Herrick has breached the Agreement, Potandon submits three affidavits with
attachments. The attachments include three emails about holiday conference calls with Walmart,
one email from a Walmart replenishment manager, and an online trade magazine article. The
three emails are group emails sent to inform produce vendors of weekly conference calls that
Walmart would hold during the holiday season to make sure it stayed apprised of any potential
“concerns with availability, quality or late deliveries.” Potandon’s sales person responsible for
selling to Walmart was included on this group email, as was Herrick and two other employees of
Eagle Eye, including Lance Poole, one of Eagle Eye’s owners. 19 Herrick admits participating in
these conference calls, but contends that they had nothing to do with selling, only ensuring
timely delivery of produce that already had been sold. 20 Herrick was also not involved in sales
to Walmart during her employment at Potandon. 21 The Court finds that participation in these
calls is not sufficient evidence that Herrick violated the Agreement.

18

Docket No. 19, at 2.

19

Docket No.10-2, at 5–7, 9–10.

20

Docket No. 16-1, at 3.

21

Id.
5

The other email from Walmart, addressed to Herrick and a handful of other individuals at
other produce companies, asks about the availability of particular varieties of potatoes. The
Walmart manager states, “I am in the process of looking at inventory for PTO RED 10#, 5#,
Bulk, Micro Bag Red and PTO Yellow 5# and Micro Bag Yellow. I would greatly appreciate
your recommendations. I want to make sure that we don’t have any product gap or instock
issues.” 22 On its face, this email is ambiguous. The email could be requesting advice on what
types of produce will be available in the future based on current supply, or it could be requesting
a quote for the listed products. Without evidence of the context of this email and how Herrick
responded, the Court also finds that it is also not compelling evidence that Herrick violated the
Agreement.
Finally, the article from the online trade magazine is about the accidental death of a
produce buyer. The article states that Herrick is a current packaging coordinator at Eagle Eye.
Herrick is quoted as saying that her “heart just broke [hearing about the accident],” and that she
had met the buyer “while she worked at Potandon Produce, LLC.” 23 The Court finds that the
fact, taken alone, that she created relationships with produce buyers during her tenure at
Potandon does not prove that she is currently exploiting those contacts to the advantage of Eagle
Eye.
Herrick points out that her current job title says nothing about sales. Potandon argues
that Herrick’s job title is not dispositive as to whether or not she is violating the Agreement.
This is true. However, Potandon goes further to argue that she is prohibited by the Agreement
from not only activities directly related to selling produce, but also from any activity that is
similar to any activity that she did as a sales person for Potandon. This is an unsupportable
22

Docket No. 10-2, at 8.

23

Docket No. 10-3, at 14.
6

position because, according to the Idaho statute, the Agreement, either as written or as
subsequently modified by the Court, cannot “impose a greater restraint than is reasonably
necessary to protect the employer’s legitimate business interests.” 24 For the purpose of this
Motion alone and for the reasons stated above, the Court finds that Potandon is unlikely to
succeed on the merits of its claim.
B. IRREPARABLE HARM
“‘The basis of injunctive relief in the federal courts has always been irreparable harm and
inadequacy of legal remedies.’” 25 Even if the Court were to assume, for the sake of argument,
that Potandon is likely to succeed on the merits of its contract claims, it cannot show that it is
likely to suffer irreparable harm if Herrick continues to work for Eagle Eye as a Packaging and
Transportation Clerk. “‘Issuing a preliminary injunction based only on a possibility of
irreparable harm is inconsistent with our characterization of injunctive relief as an extraordinary
remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such
relief.’” 26 Potandon has made no such showing other than to speculate that Herrick will
“misappropriate Potandon’s goodwill for her own benefit[,] . . . reduce or take away the goodwill
Potandon has developed over the years . . . [and] disclose confidential information” 27 if allowed
to continue to work for Eagle Eye. Potandon provides no evidence for these bald assertions.
Even if Potandon had provided evidence that it was losing money because Herrick was diverting
customers from Potandon, misappropriating its goodwill, and disclosing confidential

24

Idaho Code Ann. § 44–2701.

25

Stanley v. Univ. of S. Cal., 13 F.3d 1313, 1320 (9th Cir. 1994) (quoting Beacon
Theatres, Inc. v. Westover, 359 U.S. 500, 506–07 (1959)).
26

Am. Trucking Assocs. v. City of L. A., 559 F.3d 1046, 1052 (9th Cir. 2009) (quoting
Winter, 555 U.S. at 22).
27

Docket No. 10-1, at 11.
7

information, it may not be enough to prove irreparable harm because, as Potandon concedes,
“economic losses alone will not support a finding of irreparable harm.” 28 It is well established
that “[p]urely economic harms are generally not irreparable, as money lost may be recovered
later, in the ordinary course of litigation.” 29
Potandon argues that, under Idaho law, intangible injuries such as a loss of goodwill
alone qualify as irreparable harm. This argument fails for two reasons. First, the two cases that
Potandon uses to support its argument both involve non-compete agreements that were signed
incidental to the sale of a business. Idaho courts have long held that non-competes are construed
more liberally in the context of the sale of a business than in the employment context.
“‘[R]estrictive covenants in contracts limiting an employee’s natural right to pursue an
occupation and thus support himself and his family will be strictly scrutinized,’ but courts are
less strict in construing the reasonableness of such covenants ancillary to the sale of a
business.” 30 Second, Potandon provides no specific evidence, only conclusory statements, of
potential lost goodwill, disclosure of confidential information, and other intangible harms
stemming from Herrick’s employment at Eagle Eye. Potandon’s speculations that —“[i]f
Herrick is allowed to continue her course, it is not only likely, but a near certainty Potandon will
suffer irreparable harm,” 31 and that “it is a virtual certainty that Herrick will disclose confidential
information” 32—do not, without evidence, establish a likelihood of irreparable harm.

28

Id.

29

Idaho v. Coeur d'Alene Tribe, 794 F.3d 1039, 1046 (9th Cir. 2015).

30

Bybee v. Isaac, 178 P.3d 616, 621 (Idaho 2008).

31

Docket No. 10-1, at 10.

32

Id. at 11.
8

Finally, Potandon has known about Herrick’s employment with Eagle Eye since August
2015, and did not file a motion for a preliminary injunction until after Herrick filed her suit in
November 2015. This delay cuts against Potandon’s argument for irreparable harm. The Ninth
Circuit has noted that a “[p]laintiff’s long delay before seeking a preliminary injunction implies a
lack of urgency and irreparable harm,” 33 and in such cases, the length of time for delay “need not
be great.” 34 In Garcia v. Google, the Ninth Circuit held that the district court did not abuse its
discretion in finding that the plaintiff’s delay of a few months in seeking an injunction undercut
her claim of irreparable harm. 35 Here, Potandon also waited several months before attempting to
enjoin Herrick from working at Eagle Eye. In summary, for the reasons stated above, Potandon
has not established a likelihood of irreparable harm.
C. BALANCE OF THE EQUITIES
The Court finds that the balance of the equities also tips in Herrick’s favor. If the
injunction is granted, Herrick will not be able to do her job at Eagle Eye. Potandon argues that
this not a hardship as she is free to engage in any “non-sales role within the produce industry.” 36
However, this statement runs counter to Potandon’s argument that her current job as a Packaging
and Transportation Clerk violates the Agreement. Should Potandon’s broad interpretation of the
Agreement prevail, Herrick would likely be precluded from doing many non-sales related jobs in
the produce industry. Restricting so many opportunities for her to make a living would be a
great hardship on Herrick. Potandon, on the other hand, has provided no evidence of any harm,

33

Garcia v. Google, Inc., 786 F.3d 733, 746 (9th Cir. 2015) (quoting Oakland Tribune,
Inc. v. Chronicle Publi’g Co., 762 F.2d 1374, 1377 (9th Cir. 1985)).
34

Id. (internal quotation marks omitted).

35

Id.

36

Docket No. 10-1, at 13.
9

intangible or economic, that would show Herrick’s current employment creates a hardship which
tips the balance of the equities in Potandon’s favor.
D. PUBLIC INTEREST
The Court finds that the public interest tips in favor of Potandon because of Idaho’s
legislation favoring enforcement of employee non-compete agreements in certain circumstances.
The Ninth Circuit has held that, for the purposes of a preliminary injunction,“[t]he public interest
may be declared in the form of a statute.” 37 However, this alone does not compensate for the
failure to meet the three other factors.
III. CONCLUSION
It is therefore
ORDERED that Defendant Potandon’s Motion for a Preliminary Injunction (Docket No.
10) is DENIED. It is further
ORDERED that the parties submit a stipulated scheduling order to
[e-mail] for the Court’s signature within 14 days.
DATED February 26th, 2016.
BY THE COURT:

________________________________________
Ted Stewart
United States District Judge

37

Golden Gate Rest. Ass’n v. City and Cty. of S.F., 512 F.3d 1112, 1127 (9th Cir. 2008).
10