Allegis Group, Inc. v. Zachary Piper LLC, 12 CVS 2984

• Decision Date: 25 February 2013
• Docket Number: 12 CVS 2984
• Citation: Allegis Group, Inc. v. Zachary Piper LLC, 2013 NCBC 13, 12 CVS 2984 (N.C. Super. Ct. Feb 25, 2013)
• Court: Superior Court of North Carolina
• Parties: ALLEGIS GROUP, INC., AEROTEK, INC. and TEKSYTEMS, INC., Plaintiffs, v. ZACHARY PIPER LLC, ZACHARY PIPER, LLC NORTH CAROLINA, PIPER ENTERPRISE SOLUTIONS NORTH CAROLINA, LLC, JUSTIN JORDAN, DANIEL CURRAN, and MICHAEL NICHOLAS, Defendants.

2013 NCBC 13

ALLEGIS GROUP, INC., AEROTEK, INC. and TEKSYTEMS, INC., Plaintiffs, v. ZACHARY PIPER LLC, ZACHARY PIPER, LLC NORTH CAROLINA, PIPER ENTERPRISE SOLUTIONS NORTH CAROLINA, LLC, JUSTIN JORDAN, DANIEL CURRAN, and MICHAEL NICHOLAS, Defendants.

No. 12 CVS 2984

Superior Court of North Carolina, Durham

February 25, 2013

Littler Mendelson, PC by Ryan R. Crosswell, Stephen Douglas Dellinger, Paul J. Kennedy(pro hac vice), and Jacqueline Johnson Lichty(pro hac vice) for Plaintiffs.

Jordan Price Wall Gray Jones & Carlton, PLLC by Lori P. Jones and Paul T. Flick, and Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. by Jillian M. Collins(pro hac vice), Katharine O. Beattie(pro hac vice), and Donald W. Schroeder(pro hac vice) for Defendants.

ORDER ON PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION AND DEFENDANTS’ MOTION TO DISMISS

GALE, JUDGE.

{1} THIS MATTER is before the court on Plaintiffs' Motion for Preliminary Injunction("P.I. Motion") pursuant to Rule 65 of the North Carolina Rules of Civil Procedure("Rule(s)"), and Defendants' Motion to Dismiss Plaintiffs' Amended Complaint("Motion to Dismiss"), pursuant to Rule 12(b)(6).The Motion for Preliminary Injunction is DENIED, and the Motion to Dismiss is GRANTED as to fiduciary duty claims against Daniel Curran and Michael Nicholas, but is otherwise DENIED.

I.INTRODUCTION

{2}PlaintiffsAllegis Group, Inc.("Allegis"), Aerotek, Inc.("Aerotek"), and TEKsystems, Inc.("TEKsystems"), (collectively, "Plaintiffs") seek injunctive and monetary relief against DefendantsZachary Piper LLC("ZP"), Zachary Piper, LLC North Carolina ("ZP-NC"), and Piper Enterprise Solutions North Carolina, LLC("PES-NC")(collectively, the "Corporate Defendants"), and Justin Jordan("Jordan"), Daniel Curran("Curran"), and Michael Nicholas("Nicholas")(collectively, the "Individual Defendants").The Individual Defendants are former Aerotek employees.

{3}Plaintiffs allege that Jordan, a former high level Aerotek executive, established the Corporate Defendants in order to compete with Plaintiffs and seeks to do so with an unfair advantage by misappropriating Plaintiffs' trade secrets and systematically raiding trained Aerotek employees with whom Jordan formerly worked closely.The Amended Complaint asserts tortious interference with contracts of former Aerotek employees.Litigation for the actual breach of those contracts was instead brought in Maryland.

{4} The questions now before the court are whether Plaintiffs have adequately stated a claim for relief, and if so, whether they have demonstrated a probability of success on those claims adequate to justify the issuance of a preliminary injunction.The Motions raise issues of a competitor's privilege and the extent to which Plaintiffs can rely on a doctrine of inevitable disclosure to secure an injunction in regard to claimed trade secrets.

II.PROCEDURAL HISTORY

{5} Aerotek and TEKsystems filed a Verified Complaint against the Corporate Defendants on May 3, 2012, accompanied by a Motion for Temporary Restraining Order and Preliminary Injunction.The case was designated as a mandatory complex business case on May 16, 2012, and assigned to the undersigned on May 21, 2012.A May 29, 2012 Consent Order allowed expedited discovery to proceed before a hearing on the P.I. Motion.

{6}Plaintiffs filed their Amended Complaint on June 13, 2012, adding as a Plaintiff Allegis, which owns both Aerotek and TEKsystems, and adding the Individual Defendants.Defendants filed their Motion to Dismiss Plaintiffs' Amended Complaint on July 10, 2012.Plaintiffs filed their P.I. Motion on July 16, 2012 seeking to enjoin the Corporate Defendants and Jordan from:

a) Employing the following individuals with whom Plaintiffs had employment contracts and whose departure from Aerotek is now the subject of Plaintiffs' suit, namely: Michael Nicholas, Daniel Curran, Christopher Hadley, Ana Neto Rodrigues, and Alexander Ferrello;

b) Continuing to solicit employees of Aerotek to cease employment with Aerotek to join Defendants' Companies or its affiliates;

c) Continuing to divert business from Aerotek through tortious interference with their employment contracts, unlawful competition and deceptive trade practices, and misappropriation of their confidential business information; and

d) Continuing to misappropriate Plaintiffs' confidential information.(Mot. for Prelim.Inj. 1–2.)

{7}The court heard the P.I. Motion on July 18, 2012.Briefing on the Motion to Dismiss was not complete at that time, but the court's review of the briefs on the Motion to Dismiss which are now complete reflects that issues in these briefs were, at least in the main part, fully argued at the hearing on the P.I. Motion.After the P.I. Motion hearing, the Parties requested that the court withhold ruling pending a mediation effort.No settlement resulted and the Parties requested that the court resume its consideration of the pending motions.The court proceeds to rule on the P.I. Motion and the Motion to Dismiss without further argument.

III.STATEMENT OF FACTS

{8} For purposes of the Motion to Dismiss, the court assumes the facts alleged in the Amended Complaint to be true and makes inferences in Plaintiffs' favor while not being bound by legal conclusions.As to the P.I. Motion, the court examines both the pleadings and additional evidence submitted to determine whether Plaintiffs have satisfied their burden of securing preliminary injunctive relief.Any findings in that regard are solely for purposes of the P.I. Motion, are not otherwise binding, and do not become "law of the case."

A.The Parties

1.Plaintiffs

{9} Allegis owns both Aerotek and TEKsystems, which are each staffing companies that find and place employees in temporary and permanent positions.Aerotek primarily focuses on "satisfying the scientific, software, engineering, and administrative needs of its clients, " as well as staffing the Department of Defense and other governmental entities.(Mot. for Prelim.Inj. 2 ¶ 1.)TEKsystems also staffs governmental entities including the Department of Defense, but primarily focuses on staffing information technology and communications positions.(Am. Mem. in Supp. of Prelim. Inj. 3.)Plaintiffs allege that Aerotek and TEKsystems share clients and confidential information and conduct joint employee training, such that employees of one company have access to confidential information of the other.(Am. Mem. in Supp. of Prelim. Inj. 4.)

2.Defendant Jordan

{10} Jordan was first hired by Aerotek's predecessor Onsite Companies, Inc. in 1996.(Am. Mem. in Supp. of Prelim. Inj. 5.)He was promoted several times, in 2008 becoming Regional Vice President based at Aerotek's Fairfax, Virginia office.(Am. Mem. in Supp. of Prelim. Inj. 5.)In this position, Jordan managed a team of national salespeople and was responsible for the Mid-Atlantic Region, which included Virginia, Maryland, Washington D.C., West Virginia, Alabama, and Tennessee.(Am. Mem. in Supp. of Prelim. Inj. 5.)Jordan remained in that position until his resignation from Aerotek on February 20, 2009.(Am. Mem. in Supp. of Prelim. Inj. 5.)Jordan signed both an Aerotek Employment Agreement and an Aerotek Incentive Investment Plan Agreement ("IIP Agreement").

3.Former Aerotek Employees

{11}Plaintiffs complain that the Corporate Defendants have hired six former Aerotek employees, and the employment contracts of five of them are the focus in this litigation: Michael Nicholas, Daniel Curran, Christopher Hadley, Ana Neto Rodrigues, and Alexander Ferrello(collectively the "Former Employees").^[1]Each of the Former Employees signed an Aerotek Employment Agreement.

{12} Nicholas worked for Aerotek from September 2006 until his resignation on January 3, 2012, at which time he was a National Account Manager in the Arlington, Virginia office.(Am. Mem. in Supp. of Prelim. Inj. 9.)Nicholas signed both an Aerotek Employment Agreement and an Aerotek IIP Agreement.(Am. Mem. in Supp. of Prelim. Inj. 15.)Nicholas is currently employed by PES-NC in sales.(Defs.' Am. Mem. in Opp'n to Pls.'Mot. for Prelim.Inj. 14.)

{13} Curran worked for Aerotek from September 2003 until his resignation on September 16, 2011, at which time he was a Director of Strategic Sales for Government Services at Aerotek's Washington, D.C. office.(Am. Mem. in Supp. of Prelim. Inj. 9.)Curran signed an Aerotek Employment Agreement and an Aerotek IIP Agreement.(Am. Mem. in Supp. of Prelim. Inj. 9.)Curran is currently employed by PES-NC in sales.(Defs.' Am. Mem. in Opp'n to Pls.'Mot. for Prelim.Inj. 14.)

{14} Hadley worked for Aerotek from February 26, 2001 until his resignation on April 6, 2012, at which time he was a Director of Strategic Sales and Operations with the Government Services Group in Aerotek's Fairfax, Virginia office.(Am. Mem. in Supp. of Prelim. Inj. 5.)Hadley signed an Aerotek Employment Agreement.Hadley is currently employed by PES-NC in sales.(Defs.' Am. Mem. in Opp'n to Pls.'Mot. for Prelim.Inj. 14.)

{15} Rodrigues worked for Aerotek from December 17, 2004 until her resignation on March 30, 2012, at which time she was an Account Manager in Aerotek's Arlington, Virginia office.(Am. Mem. in Supp. of Prelim. Inj. 9.)Rodrigues signed an Aerotek Employment Agreement.Rodrigues now works as a salesperson for Piper Enterprise Solutions, LLC, which is not a defendant and which is a separate entity from PES-NC.(Am. Mem. in Supp. of Prelim. Inj. 10 n.50;Defs.'Am. Mem. in Opp'n to Pls.'Mot. for Prelim.Inj. 15.)

{16} Ferrello worked for Aerotek from June 11, 2007 until his resignation on March 30, 2012, at which time he was an Account Recruiting Manager at Aerotek's Fairfax, Virginia office.(Am. Mem. in Supp. of Prelim. Inj. 10.)Ferrello signed an Aerotek Employment Agreement.Ferrello now works for Piper Enterprise Solutions, LLC as its Director of Recruiting.(Defs.' Am. Mem. in Opp'n to Pls.'Mot. for...