ISCO Industries, LLC v. Erdle

Filing 19

ORDER granting in part and denying in part 16 Motion for Temporary Restraining Order. Counsel is reminded to read the order in its entirety for critical deadlines and instructions. Signed by Senior Judge James C. Fox on 10/26/2011. (Edwards, S.)

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NORTH CAROLINA

WESTERN DIVISION

No.5:11-CV-552-F

ISCO INDUSTRIES, LLC, a Kentucky
limited liability company,

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Plaintiff,

v.

ORDER

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CARL D. ERDLE, an adult individual,
Defendant.

This matter is before the court upon the Motion for Temporary Restraining Order,
Preliminary Injunction, and Permanent Injunction [DE-16] filed by Plaintiff ISCO Industries, LLC
("ISCO") against Defendant Carl D. Erdle ("Erdle"). In the instant motion, ISCO specifically seeks
a temporary restraining order until such time the court has an opportunity to rule on the motion for
preliminary injunction.

I. BACKGROUND
This action arises out ofa complaint filed on October 11, 2011, by ISCO claiming that Erdle
breached the terms and conditions as set forth in the Non-Disclosure and Non-Competition, NonSolicitation Agreements consummated on August 25,2003. Summons was issued as to Erdle on
October 13, 2011 and, on October 25,2011, ISCO submitted Proof of Service indicating that Erdle
has been properly served with process. See [DE-15].
On October 18, 2011, ISCO filed its first Motion for Temporary Restraining Order,

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Preliminary Injunction, and Permanent Injunction [DE-9]. The court, on October 24, 2011, issued
an Order [DE-14] denying ISCO' s request for temporary injunctive relief for failure to abide by the
requirements under Rule 65(b) of the Federal Rules of Civil Procedure, namely, that the moving
counsel certifies in writing any efforts made to give notice and the reasons why it should not be
required.
On October 25, 2011, ISCO filed its second Motion for Temporary Restraining Order,
Preliminary Injunction, and Permanent Injunction [DE-16], this time attaching the affidavit of
Andrew L. Fitzgerald, co-counsel for ISCO. The affidavit provides that Erdle was served by a
process server with a copy of the Complaint and Summons in this matter on October 19,2011 and
also certifies that a copy ofthe Motion for Temporary Restraining Order, Preliminary Injunction, and
Permanent Injunction was sent to Erdle via Priority Mail on the same date and that it has not been
returned to ISCO as undeliverable. See [DE-16], Ex. 12.
In the second Motion for Temporary Restraining Order, Preliminary Injunction, and
Permanent Injunction, ISCO specifically seeks the following relief:
a. For a temporary restraining order enjoining Erdle to perform the Non-Compete
Agreement by not engaging in any business, acquiring an interest in any business or
profession, or serving as an agent, lender, member, officer, partner, director,
employee, investor, proprietor, consultant, stockholder, representative, or
independent contractor of any business, that competes with the business ofISCO or
any affiliate (and their respective assignees and successors in interest) within thirty
(30) miles ofany location where ISCO does business and Erdle provided services for
ISCO during the term of his employment with ISCO, for a period of thirty-six (36)
months, until such time as the Court enters a preliminary injunction and then a
permanent injunction so enjoining Erdle;
b. For a temporary restraining order enjoining Erdle from diverting, contacting,
soliciting, doing business with or attempting to do any of these with any existing or
prospective ISCO customer or with any person who has been an ISCO customer at
any time within two years before Erdle's separation from employment, until such
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time as the Court enters a preliminary injunction and then a permanent injunction so
enjoining Erdle;
c. For a temporary restraining order enjoining Erdle from directing or otherwise
targeting any selling, marketing, or promotional efforts of any person at any existing
or prospective ISCO customer, until such time as the Court enters a preliminary
injunction and then a permanent injunction so enjoining Erdle;
d. For a temporary restraining order enjoining Erdle from divulging any non-public
information, knowledge or data relating to ISCO's business that Erdle obtained while
he was employed by ISCO, until such time as the Court enters a preliminary
injunction and then a permanent injunction so enjoining Erdle;
e. For a temporary restraining order enjoining Erdle from disclosing any ofISCO's
financial information, until such time as the Court enters a preliminary inj unction and
then a permanent injunction so enjoining Erdle;
f. For a temporary restraining order enjoining Erdle to identify and return to ISCO
all memoranda, notes, records, code books, papers, customer lists and other
documents and all copies thereof relating to ISCO's business or its subsidiaries or
affiliates within Erdle's custody, possession or control, until such time as the Court
enters a preliminary injunction and then a permanent injunction so enjoining Erdle;
h. For attorneys' fees and costs incurred in obtaining all temporary and permanent
injunctive relief; and
i. For such other, further relief as the Court deems appropriate.
[DE-16], Mot. for TRO, pp. 9 - 10. This matter is now ripe for ruling.

II. DISCUSSION
Rule 65 of the Federal Rules of Civil Procedure govern the issuances of injunctions and
restraining orders. Rule 65(b)(1) states:
The court may issue a temporary restraining order without written or oral notice to
the adverse party or its attorney only if:
(A) specific facts in an affidavit or a verified complaint clearly show that immediate
and irreparable injury, loss, or damage will result to the movant before the adverse
party can be heard in opposition; and

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(B) the movant's attorney certifies in writing any efforts made to give notice and the
reasons why it should not be required.
Fed.R.Civ.P.65(b)(I). Here, with the second Motion for Temporary Restraining Order, Preliminary
Injunction, and Pennanent Injunction [DE-16], ISCO has provided an affidavit of Andrew L.
Fitzgerald, co-counsel for ISCO, which certifies that a copy the instant motion was mailed to Erdle.

See [DE-16], Ex. 12. As it appears that the proper certification of notice has now been filed, the
court is free to consider the substantive merits of issuing a temporary restraining order under Rule
65(b)(1 )(A).
The court may grant a temporary restraining order if the moving party establishes four
requirements: (1) likelihood of success on the merits; (2) likelihood of irreparable harm in the
absence ofpreliminary relief; (3) that the balance ofthe equities tips in Plaintiffs favor; and (4) that
an injunction is in the public interest. Real Truth About Obama, Inc. v. Federal Election Com 'n, 575
F.3d 342, 346 (4th Cir. 2009), vacated on other grounds 130 S.Ct. 2371 (2010), reinstated in

relevant part on remand 607 F.3d 355 (4th Cir. 20 I0) (per curiam). All four requirements must be
satisfied. Id. These requirements will be addressed in tum.
A. Likelihood of Success on the Merits
First, upon careful consideration of the record, it appears that ISCO is likely to succeed on
the merits of the case. ISCO has provided the court with copies of the Non-Disclosure and NonCompetition, Non-Solicitation Agreements which seemingly indicate that Erdle acknowledged and
agreed to abide by the tenns and conditions of such agreements, which included, inter alia, an
accord to protect the business interests of ISCO, including trade secrets and other important
confidential infonnation such as infonnation regarding substantial relationships with existing or

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prospective vendors, suppliers, customers, contractors, consultants, and independent contractors.

See [DE-16], Mot. for TRO, Ex. B, C. Moreover, upon review, it appears that the restrictive
covenants in these agreements are sufficiently reasonable and appropriate, limited in geography, and
temporal in time. It also appears that the agreements provides for injunctive relief to enjoin and
restrain should a breach occur. See [DE-16], Mot. for TRO, Ex. B, C. Furthermore, ISCO have
provided the court with a report of the commissions that Erdle purported earned as an result signing
such agreements. See [DE-16], Mot. for TRO, Ex. A-I. In light ofthe evidence provided, it appears
that ISCO is likely to succeed on the merits of its claim against Erdle.

B. Likelihood of Irreparable Harm
Second, it appears that ISCO will suffer irreparable harm in the absence of temporary
preliminary relief. The record suggests that Erdle was employed both as a salesman and later as a
regional sales manager, for ISCO from August 25, 2003 until September 27,2011. See [DE-16],
Mot. for TRO, Ex. A. During this time period, ISCO contends that it made significant investments
of time and money into training Erdle to become knowledgeable about its business, products, and
capabilities. See [DE-16], Mot. for TRO, Ex. A. Moreover, in the course of this training, ISCO
claims that Erdle inevitably had access to detailed, confidential information relating to ISCO's
operations, sales, and marketing strategies, which he can now use to ISCO's detriment in his new
position with HD supply, a purported direct competitor of ISCO. See [DE-16], Mot. for TRO, Ex.
A. Consequently, the court finds that irreparable harm and injury may likely result without the

issuance of a temporary restraining order. As such, the likelihood of irreparable harm weighs in
favor ofISCO's requested temporary injunctive relief.

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C. Balance of the Equities
Third, the balance of the equities weighs in favor ofISCO. In making this assessment, the
court should consider the harm likely to be suffered by the plaintiff if relief that is denied is actual
and imminent or merely remote and speculative and then balance this harm or injury against the
harm to the defendant if the relief is granted. North Carolina Right to Life, Inc. v. Leake, 108
F.Supp.2d 498, 503 (E.D.N.C. 2000). Here, again, Erdle has acquired confidential knowledge
regarding ISCO's business operations, sales, and marketing strategies, and if used in favor of his
current employer, HD Supply, will result in immediate and irreparable harm. On the other hand,
although Erdle may be hampered in his ability to fully perform his current duties at HD Supply
should the temporary restraining order be allowed, he allegedly obtained this position knowing that
it would be in violation ofthe terms and conditions of the Non-Disclosure and Non-Competition,
Non-Solicitation Agreements signed while employed at ISCO. Therefore, the court finds that, in
balancing the equities, this requirement weighs in favor of ISCO.

D. Public Interest
Finally, the court finds that the public interest is served by granting this temporary restraining
order because such issuance ensures that valid contracts are enforced and makes sure that businesses
are able to share confidential and proprietary information with its employees without fear it will end
up in the hands of a competitor. See Philips Electronics North America Corp. v. Hope, 631
F.Supp.2d 705, 724 (M.D.N.C. 2009) (citation omitted). Therefore, the public interest requirement
also weighs in favor of ISCO.

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III. CONCLUSION

Based on the aforementioned reasons, the court finds that ISCO has sufficiently satisfied the
requirements for an issuance of a temporary restraining order against Erdle. However, ISCO's
motion [DE-9] is ALLOWED ONLY IN PART. It is ADJUDGED and ORDERED that:
l. Erdle, from the date and time of the entry of this order, comply with all the terms and
conditions of the Non-Disclosure and Non-Competition, Non-Solicitation Agreements until such
time as the Court has an opportunity to rule on the Motion for Preliminary Injunction.
2. ISCO, within five (5) business days of the entry of this order, shall post a bond in the
aggregate amount of fifty thousand dollars ($50,000), pursuant to Rule 65(c) of the Federal Rules
of Civil Procedure.
3. A Hearing is set on ISCO's Motion for Preliminary Injunction before the court on Friday,
November 4, 20 II, at 10:00 am, in Wilmington, North Carolina, to determine if an order shall be
entered in accordance with Rule 65 of the Federal Rules of Civil Procedure, preliminarily enjoining
Erdle from engaging in activities which ISCO purports are in violation of the Non-Disclosure and
Non-Competition, Non-Solicitation Agreements.
4. This order shall remain in full force and effect pending the November 4,2011, hearing
on ISCO's Motion for Preliminary Injunction.
5. Counsel retained by Erdle is DIRECTED to file a Notice of Appearance in this case
without delay.
6. The determination as to whether any attorneys' fees are appropriate for ISCO will be made
once this case has been fully adjudicated on the merits.
SO ORDERED.
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This the 26th day of October, 2011.

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