Sharp Medical Solutions, LLC v. Stobbe et al
ORDER granting in part 8 Motion for Temporary Restraining Order. The plaintiff's motion for a temporary restraining order is granted in part. This order is effective immediately and shall remain in full force for a period up to and including A ugust 4, 2017, unless extended pursuant to Fed. R. Civ. P. 65(b)(2). A hearing on preliminary injunction, pursuant to Fed. R. Civ. P. 65(b)(3), is set before Judge John M. Gerrard on August 4, 2017, at 9:00 a.m. in Courtroom 1, Robert V. Denney Federal Building, 100 Centennial Mall North, Lincoln, NE. Ordered by Judge John M. Gerrard. (DCD)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEBRASKA
SHARP MEDICAL SOLUTIONS,
MEMORANDUM AND ORDER
DENISE STOBBE; ROCK MEDICAL
GROUP, LLC; and LOREN ROCK,
This matter is before the Court on the plaintiff's motion for a temporary
restraining order (filing 8). Based on the evidence filed in support of that
motion, as well as the evidence adduced at a July 21, 2017 hearing on the
plaintiff's motion at which the defendants did not appear (despite two of them
having been served), the motion will be granted in part as set forth below.
Briefly summarized, the plaintiff, Sharp Medical Supplies, alleges that
two of its former employees, Denise Stobbe and Loren Rock, breached the
confidentiality, duty of loyalty, and non-solicitation provisions of their
respective employment contracts. Those provisions provide in relevant part:
Confidential Information. . . . Employee will never use or disclose
Confidential Information for any purpose other than furthering
the business interests of Employer. Upon termination (voluntary
or involuntary, for any or no reason) of employment with
Employer, Employee shall immediately return to Employer all
data, materials and other documents containing or related to any
agreement(s) as requested by Employer concerning the use and
disclosure of Confidential Information.
Duty of Loyalty. As long as employed by Employer, and in
addition to any obligations imposed by law, Employee will not: (i)
relationship with any individual or entity which competes or
intends to compete in any way with Employer; (ii) solicit for
employment or hire on behalf of any individual or entity other
than Employer any then current employee of Employer; or (iii)
interfere with Employer's customer or vendor relationships.
Post-Employment Competition. For a period of one (1) year
immediately following termination (voluntary or involuntary, for
any or no reason) of employment with Employer, Employee will
not seek or accept employment with, and will not call on or solicit
the business of, or sell to, or service (directly or indirectly, on
Employee's own behalf or in association with any other individual
or entity), any of Employer's customers with whom Employee
actually did business and had personal contact while employed by
Employer, except to the extent such activities are unrelated to,
and not competitive with, the business, products and/or services
that Employee offered or provided on behalf of Employer and
cannot adversely affect Employer's relationship or volume of
business with such customers. . . .
Filing 12 at 7-8. The plaintiff alleges that the defendants have breached and
will continue to breach these provisions by soliciting clients with whom they
had contact during their contractual relationship with the plaintiff. Further,
the plaintiff alleges that the defendants, prior to their termination, took
confidential and trade secret documents belonging to Sharp, and provided
them to defendant Rock Medical, LLC. Filing 12 at 10. According to the
plaintiff, this proprietary information is "valuable" and "crucial" to its
operation and competitiveness, and it will be irreparably harmed if the
defendants are not restrained from using it. Filing 9 at 11.
In determining whether to grant a temporary restraining order, the
Court must consider the factors set forth in Dataphase Systems, Inc. v. C.L.
Systems, Inc., 640 F.2d 109, 113 (8th Cir. 1981). Those factors include: "(1)
the threat of irreparable harm to the movant; (2) the state of balance between
this harm and the injury that granting the injunction will inflict on other
parties litigant; (3) the probability that movant will succeed on the merits;
and (4) the public interest." Id. at 114. No single factor is dispositive, and the
burden is on the movant to establish the propriety of the remedy. Baker Elec.
Co-op., Inc. v. Chaske, 28 F.3d 1466, 1472 (8th Cir. 1994).
The plaintiff argues that it faces irreparable harm because, absent a
TRO, the defendants will continue to lure away Sharp's clients in violation of
their respective employment agreements. Filing 9 at 10. This activity, it
contends, will result in economic loss and general client goodwill. Filing 9 at
10. To this end, the plaintiff alleges that the defendants took confidential
information from the plaintiff, in violation of their employment agreements
and other legal obligations, and provided it to a direct competitor (defendant
Rock Medical). Filing 12 at 11. That competitor allegedly used that
information in a work-related proposal that it sent to one of the plaintiff's
current clients. Filing 12 at 11-12.
The Court finds that the plaintiff's allegations are supported by the
evidence adduced: specifically, that defendants Stobbe and Rock were subject
to the non-compete provisions set forth above, that they wrongfully took
confidential information from the plaintiff, and that they have employed that
information in an effort to establish a competing business. Those findings are
preliminary, based on evidence adduced ex parte, and much could change
throughout these proceedings. But on the present record, based on those
preliminary findings, the plaintiff has demonstrated a reasonable likelihood
of success on the merits of its complaint, and that immediate and irreparable
injury, loss, or damages will result in the absence of a TRO.
The plaintiff has also satisfied its burden with respect to the balance of
hardships and public interest factors set forth in Dataphase. As the plaintiff
asserts, the defendants would not face substantial harm from an order that
restrains them from violating their existing employment contracts. Filing 9
at 11. Further, the plaintiff contends that the issuance of a TRO is in the
public interest because the law favors the integrity of contractual agreements
and the protection of businesses from unfair competition. Filing 9 at 12. The
Court concludes that harm to the defendants, if any at this point, would not
outweigh the hardships to the plaintiff, and that maintaining the status quo
serves the public interest in this case.
After weighing the evidence, and applying the factors as set forth
above, the Court concludes that a TRO is necessary to preserve the status
quo. This decision is based on the plaintiff's allegations and evidence with
respect to current injury and threat of irreparable harm, and its reasonable
efforts to notify the defendants in this matter. Accordingly, the Court will
enjoin the defendants from actions in violation of their employment
agreements and from using the plaintiff's proprietary information.
However, the Court will not at this point order Stobbe to provide her
personal cellular telephone and computer to a forensic examiner. The
evidence presented does not warrant such a step, and the request extends
beyond the preservation of the status quo that is the function of a temporary
restraining order. The Court will, instead, direct Stobbe to preserve any
information on those devices pending resolution of the plaintiff's pending
discovery requests by the Magistrate Judge, to whom the plaintiff may direct
any specific requests for a production order.
IT IS ORDERED:
The plaintiff's Motion for a Temporary Restraining Order
(filing 8) is granted in part as follows.
From this date forward, the defendants shall not, directly
or indirectly, solicit the business of, or sell to, any Sharp
Medical Solution customer with whom defendants Stobbe
and Rock did business or had personal contact during the
term of their employment with the plaintiff, including but
not limited to, Conexus, RightSource, Medefis, Grapetree,
in any capacity for any Sharp
competitor, including but not limited to defendant Rock
From this date forward, the defendants shall not use or
disclose confidential information, trade secrets, or other
proprietary information that defendants Stobbe and Rock
obtained as a result of their employment with the plaintiff.
This may include, but is not limited to, any information
that the defendants obtained or provided to others through
use of the plaintiff's internal or online database(s). This
traveler or prospect listed on such documents.
From this date forward, the defendants shall not destroy or
dispose of any electronically stored information, documents,
photographs or other information or documents in any form
that originated from the plaintiff. This shall include, but is
not limited to, information stored on Stobbe's personal
cellular telephone and personal computer.
This order is effective immediately and shall remain in full
force for a period up to and including August 4, 2017,
unless extended pursuant to Fed. R. Civ. P. 65(b)(2).
This order shall bind any of the following who receive
actual notice of it: the parties; their officers, agents,
servants, employees, and attorneys; and any other persons
who are in active concert or participation with them.
A hearing on preliminary injunction, pursuant to Fed. R.
Civ. P. 65(b)(3), is set before the undersigned for August 4,
2017, at 9:00 a.m. in Courtroom 1, Robert V. Denney
Federal Building, 100 Centennial Mall North, Lincoln, NE.
At that hearing, the Court will consider whether the terms
of this order shall be extended, modified, or dissolved.
Dated this 21st day of July, 2017.
BY THE COURT:
John M. Gerrard
United States District Judge
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