Champion Salt, LLC v. Arthofer et al

Filing 42

MEMORANDUM AND ORDER: IT IS HEREBY ORDERED that Defendants' Motion for an Order Scaling Back the Proposed Forensic Examination of Defendants Electronic Devices (Doc. 36 ) is GRANTED in part and the forensic examination contemplated by the TR O shall be STAYED for two weeks from the date of this Memorandum and Order. IT IS FURTHER ORDERED that, no later than Wednesday, July 21, 2021, Defendants shall withdraw Document 36 and re-file the motion under seal in compliance with E.D. Mo. L. R. 13.05. Pursuant to the revised rule, Defendants must publicly file both a motion for sealing and a redacted version of the motion. IT IS FINALLY ORDERED that this Court will RESERVE JUDGMENT on Champion's Motion for Contempt and to Enforc e Temporary Restraining Order (Doc. 22 ) and Defendants' Motion for Protective Order Regarding Deposition Notice and to Quash Third Party Subpoenas (Doc. 20 ). Both motions will be taken up at the preliminary injunction hearing on July 23, 2021. (Response to Court due by 7/21/2021.) Signed by District Judge John A. Ross on 7/19/2021. (LNJ)

Case: 4:21-cv-00755-JAR Doc. #: 42 Filed: 07/19/21 Page: 1 of 5 PageID #: 581
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
EASTERN DIVISION
CHAMPION SALT, LLC,
Plaintiff,
v.
MARK J. ARTHOFER, et al.,
Defendants.

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Case No. 4:21-CV-00755-JAR

MEMORANDUM AND ORDER
This matter is before the Court on Plaintiff Champion Salt, LLC’s (“Champion”) Motion
for Contempt and to Enforce Temporary Restraining Order (Doc. 22), Defendants’ Motion for
Protective Order Regarding Deposition Notice and to Quash Third Party Subpoenas (Doc. 20), and
Defendants’ Motion for an Order Scaling Back the Proposed Forensic Examination of Defendants’
Electronic Devices. (Doc. 36). Because the motions are closely related, it is appropriate to address
them together.
I.

BACKGROUND
Champion is a bulk supplier of de-icing salt and stores its salt at various terminals.

Defendant Mark Arthofer is the Principal of Skyline Mixing & Sales, LLC (“Skyline”), which
mixes and treats salt. On June 1, 2020, Champion, Arthofer, and Skyline entered into a Services
Agreement (the “Services Agreement”) pursuant to which Champion engaged Skyline to mix and
treat salt (“Treatment Services”) and make sales on a commission basis (“Sales Services”). (Doc.
1-3). The Services Agreement also required that the parties would “discuss by May 31, 2022 the
possibility of Skyline or [Arthofer] becoming an equity owner in Champion.” (Doc. 1-3 at § 17(r)).
The Services Agreement had an initial term continuing until May 31, 2025, with automatic
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renewals for successive one year periods unless either party provided 90 days’ notice of nonrenewal. (Id. at § 6(a)).
The parties’ relationship soured in 2021, and this case turns primarily on whether
Defendants remain obligated to comply with the restrictive covenants located in § 11 of the
Services Agreement. After June 8, 2021, as alleged by Champion and supported by e-mail
evidence and affidavits, Arthofer and Skyline began aggressively targeting Champion customers
using proprietary customer and pricing information taken from Champion’s servers. (Doc. 4 at 67; Doc. 4-1; Doc. 14-1). Champion also claims that in late May 2021, an individual using
credentials issued to Skyline and Arthofer “accessed and downloaded nearly all of Champion’s
[customer relationship management] database information . . . without authorization” and then
“attempted to permanently delete hundreds of sets of contact information for potential customers.”
(Doc. 1 at ¶¶ 56-58; Doc. 4-14). Champion explains that it proceeded to terminate Skyline and
Arthofer’s access to this database in order to protect its confidential information. (Doc. 4-1 at ¶¶
31-33). Defendants respond that its employee merely “permissibly organized and condensed the
data . . . in order to streamline information” and in so doing “the duplicate information is deleted
but remains in a single, merged data entry.” (Doc. 13 at 3).
On June 22, 2021, Champion filed its complaint (Doc. 1) and Motion for Temporary
Restraining Order (“TRO”) and Preliminary Injunction (Doc. 3) in this Court. This Court held an
in-person TRO hearing on June 25, 2021. Following the hearing, the parties consented to a
proposed TRO (Doc. 17), which this Court entered. (Doc. 18). Pursuant to the TRO, Defendants
may not “[s]olicit Champion’s customers and prospective customers” or engage in the “sale of any
products or services that are competitive” with Champion in certain states, among other
restrictions. (Id. at § 1(i-ii)). On July 7, 2021, upon request by Defendants, this Court extended the
TRO through July 23, 2021 and set a preliminary injunction hearing for that day. (Doc. 34).
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II.

DISCUSSION
Champion’s Motion for Contempt and to Enforce TRO (Doc. 22)
Champion alleges that Defendants violated the TRO by delivering approximately $25,000

worth of salt to Arconic Davenport LLC (“Arconic”), a Champion customer, on June 29, 2021,
four days after the TRO went into effect. (Doc. 23 at 5). 1 Defendants respond that this was merely
an oversight as delivery was scheduled before the TRO became effective. Defendants acknowledge
that the shipment violated the TRO but request that this Court consider all circumstances when
determining what actions, if any, are necessary to remedy the violation. (Doc. 41 at 1).
It appears to this Court that Defendants may have violated the strict language of the TRO,
but that any violation was not in bad faith and can be remedied by money damages. Defendants
have “already committed to reimburse [Champion] for the shipment.” (Id. at 7). Defendants also
claim to have “laid off [ ] employees connected with the salt business,” suggesting there will not
be additional violations of the TRO. Id. at 4. At this juncture, this Court will defer ruling on
Champion’s motion for contempt and sanctions as it does not appear that Champion is at risk of
suffering continuing harm. The parties may present additional arguments on this matter during the
July 23, 2021 preliminary injunction hearing.
Defendants’ Motion for Protective Order Regarding Deposition Notice and to Quash Third
Party Subpoenas (Doc. 20)
Champion has sought additional discovery due to Defendants’ violation of the TRO.
Specifically, Champion served notices of depositions on all Defendants and third-party subpoenas
on certain parties, including Arconic. Defendants seek a protective order and quashing of the thirdparty subpoenas on the grounds that such discovery was not contemplated by the TRO, which laid

It appears the total order value may have been $25,000, but the June 29, 2021 delivery was only for an amount of
salt worth approximately $4,176.66, resulting in $579.54 in profit to Defendants. (Doc. 41 at 4).
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out a specific discovery protocol. (Doc. 21). Champion responds that Defendants have refused to
comply with the discovery requirements imposed by this Court (Doc. 18) and that the additional
discovery sought is necessary to evaluate the extent of Defendants’ violation of the TRO. (Doc.
35). For the same reasons discussed above, this Court will defer ruling on Defendants’ motion
until after the preliminary injunction hearing. The discovery sought appears to exceed the scope
of discovery permitted under the TRO, and this Court does not find such extensive discovery
immediately necessary considering the apparently limited nature of Defendants’ violation.
Defendants’ Motion for an Order Scaling Back the Proposed Forensic Examination of
Defendants’ Electronic Devices (Doc. 36)
The TRO, as agreed upon by the parties, provides that Defendants shall provide their
electronic devices to Champion’s third-party forensic consultant for examination, subject to an
agreed upon protocol, with Defendants paying all costs and expenses associated with the analysis.
(Doc. 18 at § 4). Defendants’ previous counsel, who has since withdrawn due to a conflict, appears
to have broadly accepted a Statement of Work pursuant to which an agreed upon firm would
perform the analysis. (Doc. 39 at ¶ 10). Defendants’ new counsel contends that the proposed
analysis is unduly expensive and potentially unnecessary because the parties are near “a resolution
which would resolve the entire litigation.” (Doc 36 at ¶ 5). 2
This Court agrees with the parties that this action is moving at a fast pace. It is accordingly
imperative that the parties prioritize the discovery necessary to resolve the most immediate issues
in the litigation. This Court does not believe the forensic analysis contemplated by the TRO must
be completed in advance of the preliminary injunction hearing. Therefore, this Court will grant

Champion has requested that this Court seal or redact Defendants’ motion because it includes the confidential
proposed purchase price for Champion. (Doc. 39 at 1 n.1). This Court will direct Defendants to withdraw the
unredacted filing and refile in accordance with the recently revised E.D. Mo. L.R. 13.05.

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Defendants’ motion in part and stay the forensic examination for two weeks from the date of this
Memorandum and Order.
Accordingly,
IT IS HEREBY ORDERED that Defendants’ Motion for an Order Scaling Back the
Proposed Forensic Examination of Defendants’ Electronic Devices (Doc. 36) is GRANTED in
part and the forensic examination contemplated by the TRO shall be STAYED for two weeks
from the date of this Memorandum and Order.
IT IS FURTHER ORDERED that, no later than Wednesday, July 21, 2021, Defendants
shall withdraw Document 36 and re-file the motion under seal in compliance with E.D. Mo. L.R.
13.05. Pursuant to the revised rule, Defendants must publicly file both a motion for sealing and a
redacted version of the motion.
IT IS FINALLY ORDERED that this Court will RESERVE JUDGMENT on
Champion’s Motion for Contempt and to Enforce Temporary Restraining Order (Doc. 22) and
Defendants’ Motion for Protective Order Regarding Deposition Notice and to Quash Third Party
Subpoenas (Doc. 20). Both motions will be taken up at the preliminary injunction hearing on July
23, 2021.
Dated this 19th day of July, 2021.
________________________________
JOHN A. ROSS
UNITED STATES DISTRICT JUDGE

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