Advanced Business Telephones, Inc. v. Professional Data Processing, Inc., 10681

• Decision Date: 28 December 1984
• Docket Number: No. 10681,10681
• Citation: 359 N.W.2d 365
• Parties: ADVANCED BUSINESS TELEPHONES, INC., Plaintiff and Appellee, v. PROFESSIONAL DATA PROCESSING, INC.; Central Telephone Systems, Inc.; Paul Bakken; Bill Oliver; Charles Noesen and Roger Mortenson, Defendants and Appellants. Civ.
• Court: North Dakota Supreme Court

Page 365

359 N.W.2d 365

ADVANCED BUSINESS TELEPHONES, INC., Plaintiff and Appellee, v. PROFESSIONAL DATA PROCESSING, INC.; Central Telephone Systems, Inc.; Paul Bakken; Bill Oliver Charles Noesen and Roger Mortenson Defendants and Appellants.

Civ. No. 10681.

Supreme Court of North Dakota.

Dec. 28, 1984.

DeMars, Turman & Johnson, Fargo, for plaintiff and appellee; argued by Joseph A. Turman, Fargo.

Nilles, Hansen, Magill & Davies, Fargo, for defendants and appellants; argued by Stephen W. Plambeck, Fargo.

ERICKSTAD, Chief Justice.

Professional Data Processing, Inc. (PDP), Central Telephone Systems, Inc. (Central Telephone), Paul Bakken, Bill Oliver, Charles Noesen, and Roger Mortenson have appealed: (1) from a district court order of February 15, 1984, refusing to vacate or dissolve a temporary restraining order dated January 11, 1984, and directing that the temporary restraining order be continued as a preliminary injunction; (2) from the preliminary injunction dated February 21, 1984; and (3) from an order denying their motion for reconsideration, again refusing to vacate or dissolve the injunction. We affirm.

Advanced Business Telephones, Inc. (ABT), is in the business of sales, service and installation of telephone equipment. ABT's Telnet division resells long distance telephone services. It provides a secondary network for long distance telephone calls by purchasing blocks of WATS lines from Northwestern Bell or AT&T and securing subscribers, who then use Telnet's network. The Telnet division was started in January 1983 and it has about 350 customers.

Central Telephone is a competitor of Telnet in the business of reselling long distance telephone service. It began operating about December 1, 1983, and has about 200 customers, some of whom previously were Telnet customers.

Noesen and Mortenson are shareholders of Central Telephone and PDP, which formerly provided Telnet with a computerized billing service and Bakken, now an employee of Central Telephone, worked with ABT from January 1983 to November 1983 as an independent contractor, securing customers for ABT on a commission basis. Oliver, now an employee of Central Telephone, previously worked with ABT as an independent contractor in the nature of general manager of ABT's Telnet division. He started setting up the long distance service for ABT in January 1983. Before that, he had been an agent for Comprehensive Communication Systems, Inc. (CCSI--now known as Republic), the first long distance reseller in the Fargo area, some customers of which transferred their business to ABT when Oliver joined ABT. He left ABT about September 20, 1983, and joined Central Telephone.

By complaint dated January 10, 1984, ABT brought suit against the defendants, seeking damages and an injunction to prohibit continued use of ABT trade secrets, ¹ which ABT asserts have been misappropriated. The trade secret, if any, involved here is a list of business customers of ABT's Telnet division.

On January 11, 1984, the district court issued a temporary restraining order and order to show cause, by which the defendants were:

"restrained and prohibited from utilizing such information as was improperly obtained from the Plaintiff, including but not limited to ... customer lists ... and other information gained through their employment and/or fiduciary relationships with Advanced Business Telephones, Inc.;"

and were ordered to show cause on January 26, 1984, why the temporary restraining order should not

"continue in effect or be made a preliminary or a permanent injunction pending conclusion of trial and entry of judgment on the complaint herein."

After a hearing on the order to show cause, the district court, on February 15, 1984, ordered that the temporary restraining order be continued as a preliminary injunction, with the subject matter of the injunction reduced to include only the customer list. Pursuant to that order, counsel for ABT prepared a new preliminary injunction, which the court issued on February 21, 1984, providing:

"IT IS HEREBY ORDERED that the Defendants and each of them are hereby restrained and prohibited from utilizing such information as was improperly obtained from the Plaintiff as it relates to the customer list of the Plaintiff. The Defendants are restrained from initiating any affirmative solicitation for business with any of such customers contained in said list;

"IT IS FURTHER ORDERED that this Preliminary Injunction shall remain in effect pending the completion of this action on the merits."

On April 4, 1984, the defendants filed a motion for reconsideration, which was heard on April 11, 1984, at which time the district court directed ABT's counsel to prepare an order denying the motion and setting bond in the amount of $10,000. Such an order was prepared and the district court issued it on April 17, 1984.

The orders appealed from are appealable under Sec. 28-27-02(3), N.D.C.C., which provides for appeal of an order which "grants, refuses, modifies, or dissolves an injunction or refuses to modify or dissolve an injunction."

As in Tyler v. Porter, 230 N.W.2d 612, 615 (N.D.1975):

"Although the parties, in briefing and argument, often adverted to their contentions in the principal action, the issues in the principal action are not before us. We therefore have nothing to say at this time on [those contentions].... The only issues before us relate to the discretion exercised by the trial court in ruling on motions and in the issuance or refusal of restraining orders and injunctions, and whether or not that discretion was abused."

See also, Amerada Hess Corporation v. Furlong Oil & Minerals Company, 336 N.W.2d 129 (N.D.1983). The principal action has not yet been tried. We were informed at oral argument that a note of issue has not been filed and that discovery has not been completed. The trial court specifically stated that its finding that the customer list involved is a trade secret "is limited to the...