Hunt et al v. Key
Filing
23
MEMORANDUM DECISION AND ORDER denying 16 Motion for Summary Judgment; denying 17 Motion to Continue: proposed amended scheduling order(s) to be submitted by 3/7/14. Signed by Magistrate Judge Paul M. Warner on 2/24/14 (alt)
IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION
CARL HUNT and JC HUNT
COMPANY,
MEMORANDUM DECISION AND
ORDER
Plaintiffs,
Case No. 2:13cv83
v.
JACKY KEY,
Defendant.
Magistrate Judge Paul M. Warner
On March 15, 2013, all parties consented to having United States Magistrate Judge Paul
M. Warner conduct all proceedings in the case, including entry of final judgment, with appeal to
the United States Court of Appeals for the Tenth Circuit.1 See 28 U.S.C. § 636(c); Fed. R. Civ.
P. 73. Before the court are (1) Jacky Key’s (“Defendant”) motion for summary judgment;2 and
(2) Carl Hunt (“Mr. Hunt”) and JC Hunt Company’s (“JC Hunt”) (collectively, “Plaintiffs”)
motion to continue Defendant’s motion for summary judgment.3 On January 28, 2014, the court
held a hearing on the motions. At the hearing, Defendant was represented by Jonathan Rupp and
Plaintiffs were represented by Craig Halls. Before the hearing, the court carefully considered the
1
See docket no. 9.
2
See docket no. 16.
3
See docket no. 17.
motions, memoranda, and other materials submitted by the parties. After considering the
arguments of counsel and taking the motions under advisement, the court renders the following
memorandum decision and order.
BACKGROUND
Defendant has been driving a fuel tanker truck since 1982. In 2008, Defendant began
driving his truck as an independent contractor for JC Hunt, a commercial motor carrier. Shortly
after Defendant began working for Plaintiffs, they required him to sign a covenant not to
compete (“Covenant”) as a condition of his continued employment. The Covenant states that:
The undersigned understand and agree that Contractor has
obtained knowledge concerning the business practice,
methods and procedures, including names of customers and
dealers, personnel records, training and operation and other
information which constitutes property of J.C. Hunt
Company.
Contractor agrees that under no circumstances during the
course of the business relationship and for three (3) years
thereafter will Contractor directly or indirectly solicit to do
business of a transportation nature nor will carrier retain or
use any information concerning active or inactive accounts,
methods of operation with the company. Contractor will
not solicit any customers or entity serviced by Hunt or
solicit any of Hunt’s active dealers or engage in or permit
any activity in competition with Hunt.
Contractor will not influence or attempt to influence any
other employee of Hunt to terminate employment to work
for any competitor of Hunt.4
In 2011, Defendant ceased working for Plaintiffs and began working as an independent
contractor for another carrier, Thriftway, performing the same type of work he did for Plaintiffs,
4
Docket no. 16, Exhibit A.
2
namely terminal transfers. A terminal transfer involves loading fuel at one refinery terminal and
delivering it to another refinery terminal, rather than delivering the product to a retail outlet.
Plaintiffs assert that prior to his employment with JC Hunt, Defendant did not perform terminal
transfer work. Plaintiffs further contend that before hiring Defendant in 2011, Thriftway
likewise did not engage in terminal transfers and that Thriftway and/or Defendant solicited the
business of Western Refining, Plaintiffs’ long standing customer, away from Plaintiffs.
Defendant asserts that he did in fact engage in terminal transfers prior to working for JC Hunt
and that since leaving JC Hunt, he has been working as an independent contractor for Thriftway
driving his fuel truck for customers that he knew prior to his employment with JC Hunt.
In their complaint, Plaintiffs argue that Defendant violated the Covenant by (1)
performing terminal to terminal transfers for Thriftway and (2) soliciting Western Refining’s
business from Plaintiffs. Defendant filed his motion for summary judgment arguing that the
Covenant is unenforceable and/or unreasonable on its face because (1) it contains no
geographical limit; (2) it prohibits Defendant from engaging in any business of a transportation
nature; and (3) it prohibits Defendant from driving a fuel tanker truck, a common calling which
does not require any skills that are special, unique, or extraordinary. Plaintiffs assert that
Defendant’s summary judgment motion is premature as there has been no discovery conducted.
Defendant responds by asserting that no discovery is necessary and the court can rule as a matter
of law. The court will address these arguments in turn.
DISCUSSION
A motion for summary judgment under rule 56 of the Federal Rules of Civil Procedure is
appropriate when the pleadings, depositions, and affidavits on file show that there is no genuine
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issue as to any material fact and that the moving party is entitled to judgment as a matter of law.
See Fed. R. Civ. P. 56(c). “As a matter of law, the movant must show entitlement to summary
disposition beyond all reasonable doubt.” Alta Health Strategies, Inc. v. Kennedy, 790 F. Supp.
1085, 1089 (D. Utah 1992) (quotations and citations omitted). Once the movant demonstrates an
absence of a genuine issue of material fact, the nonmovant cannot simply rest upon his or her
pleadings, “but must set forth specific facts showing that there is a genuine issue for trial.”
Cudjoe v. Indep. Sch. Dist. No. 12, 297 F.3d 1058, 1062 (10th Cir. 2002) (quotations and citation
omitted). Plaintiffs assert that because there has been no discovery conducted in this matter,
Defendant’s motion for summary judgment is premature. Thus, in response to Defendant’s
motion, Plaintiffs filed a rule 56(d) motion. This rule provides that
If a nonmovant shows by affidavit or declaration that, for specified
reasons, it cannot present facts essential to justify its opposition,
the court may: (1) defer considering the motion or deny it; (2)
allow time to obtain affidavits or declarations or take discovery; or
(3) issue any other appropriate order.
Fed. R. Civ. P. 56(d).
The Utah Supreme Court addressed the enforceability of a covenant not to compete in
Robbins v. Findlay, 645 P.2d 623 (Utah 1982). The court held that
[c]ovenants not to compete are enforceable if carefully drawn to
protect only the legitimate interests of the employer. The
reasonableness of a covenant depends upon several factors,
including its geographical extent; duration of the limitation; the
nature of the employee's duties; and the nature of the interest
which the employer seeks to protect such as trade secrets, the
goodwill of his business, or an extraordinary investment in the
training or education of the employee.
Id. at 627. However, the court also noted that “[c]ovenants not to compete which are primarily
designed to limit competition or restrain the right to engage in a common calling are not
4
enforceable.” Id. There are two provisions of the non-compete at issue in this case. The first
provision prohibits Defendant from engaging in “business of a transportation nature” for three
years and the second provision prohibits Defendant from “solicit[ing] any customers or entity
serviced by [Plaintiffs].”5
Plaintiffs argue that discovery will aid them in determining (1) whether Defendant
engaged in terminal transfers prior to his work for Plaintiffs and (2) the nature of Defendant’s
relationship with Western Refining and whether he and/or Thriftway solicited Western Refining
from Plaintiffs. In response, Defendant argues that the Covenant is over broad on its face and is
thus unenforceable. As such, Defendant concludes, discovery is not necessary in this matter and
summary judgment should be granted in his favor. Defendant asserts that while he did in fact
engage in terminal transfers prior to working for Plaintiffs, discovering this information is
irrelevant for purposes of Defendant’s summary judgment motion. And Defendant argues that
discovering whether he and/or Thriftway do work for Western Refining is likewise irrelevant to
his motion for summary judgment. Plaintiffs contend that they are not seeking to restrict
Defendant’s ability to engage in all transportation work; they are merely requesting that he not
engage in terminal transfers in the four corners area.
While appears that the first provision may be overly broad by potentially restricting
Defendant’s right to engage in a common calling, it is unclear whether engaging in terminal
transfers is a common calling, like merely driving a truck, or whether it is unique because not
many people engage in it. The second provision is more narrowly tailored to protect the
goodwill of Plaintiffs’ business and, as such, discovery regarding the nature of Defendant’s
5
Id.
5
relationship with Western Refining is appropriate. The court has determined that these factual
issues are materially sufficient to defeat summary judgment at this time. Thus, the court
concludes that this matter is not ripe for summary judgment and discovery should proceed as
usual.
CONCLUSION
Based on the foregoing, Defendant’s motion for summary judgment is DENIED. After
discovery has been completed, Defendant may renew his motion or file another dispositive
motion. Plaintiffs’ motion to continue Defendant’s motion is likewise DENIED. Because many
of the dates in the current scheduling order have passed, the parties are instructed to submit a
proposed amended scheduling order to the court by March 7, 2014. If the parties cannot
stipulate to a proposed order, each party shall submit its proposed order to the court by that same
date.
IT IS SO ORDERED.
DATED this 24th day of February, 2014.
BY THE COURT:
PAUL M. WARNER
United States Magistrate Judge
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