Allied Envtl. Serv., Inc. v. Roth

• Decision Date: 29 October 2019
• Docket Number: No. 1986 MDA 2018,1986 MDA 2018
• Citation: 222 A.3d 422
• Parties: ALLIED ENVIRONMENTAL SERVICE, INC. t/a Allied Well Drilling Appellant v. Kurt ROTH, William Deineinger, Joel Yingling, Eichelbergers Energy Co., LLC t/a Eichelbergers Well Drilling
• Court: Pennsylvania Superior Court

222 A.3d 422

ALLIED ENVIRONMENTAL SERVICE, INC. t/a Allied Well Drilling Appellant

v.Kurt ROTH, William Deineinger, Joel Yingling, Eichelbergers Energy Co., LLC t/a Eichelbergers Well Drilling

No. 1986 MDA 2018

Superior Court of Pennsylvania.

Submitted May 20, 2019

Filed October 29, 2019

Walter S. Zimolong, III, Villanova, for appellant.

Joshua J. Knapp, Lancaster, for appellees.

BEFORE: BOWES, J., McLAUGHLIN, J., and STRASSBURGER^* , J.

OPINION BY BOWES, J.:

Appellant Allied Environmental Service, Inc. t/a Allied Well Drilling ("Allied") appeals from the November 16, 2018 order denying its request for a preliminary injunction. After careful review, we affirm.

This case concerns the interplay between restrictive covenants contained in employment agreements executed between Allied and Appellees Kurt Roth and Joel Yingling and the Pennsylvania Uniform Trade Secrets Act ("PUTSA"), 12 Pa.C.S. §§ 5301 - 5308.¹ Both Roth and Yingling are now employed by Appellee Eichelbergers Energy Co., LLC t/a Eichelbergers Well Drilling ("Eichelbergers"),² which is one of Allied's recognized corporate competitors in the drilling business.

The factual and procedural history of this case is relatively complex and concerns the employment timelines of both Roth and Yingling. Roth originally worked for Eichelbergers from November 2007 until June 2015. He then started working at Allied as its director of environmental services in June 2015. On June 2, 2016, Roth executed an employment agreement between himself and Allied ("Roth Agreement"),³ which included multiple clauses prohibiting Roth from disclosing various categories of "confidential information or knowledge" or from soliciting or accepting business from Allied's clients. See Roth Agreement, 6/2/16, at ¶¶ 6.1-6.3. The Roth Agreement also purported to provide Allied with the right "to enjoin [Roth] in a court of equity from violating such provisions, ...." Id. at ¶ 6.2. The parties agree that in his role as general manager of Allied, Roth was provided with access to a password-protected database containing "customer fee schedules" memorializing the prices that Allied charged or bid for various jobs, as well as the identities of Allied's clients. Id. at 45-48, 128-32. Ultimately, Roth left Allied in March 2018 and returned to working for the Eichelbergers.

Yingling began working for Allied in Pennsylvania in November 2010. Id. at 186. Yingling worked for Allied as a driller and signed his employment agreement ("Yingling Agreement") on or about January 18, 2017, the day before he was slated to sit for a Maryland drilling license exam for which Allied was his sponsor. Id. at 16-18, 20, 186-88. In relevant part, the Yingling Agreement contained a clause providing that Yingling "shall not in any way, directly or indirectly, solicit, divert, take away or attempt to solicit, divert or take away any staff" from Allied. See Yingling Agreement at ¶ 6.1. Following his execution of the agreement, Yingling completed his exam successfully and was accredited as a general journeyman driller in Maryland. Id. at 182-83. While he was still working for Allied, Yingling suggested that his fellow employee, Shawn Rose, submit an application to Eichelbergers.⁴ Id. at 179-80. Thereafter, Yingling departed Allied in January 2018 and began working for Eichelbergers. Id. at 174.

On March 20, 2018, Allied sent a letter to Yingling advising him that it considered his employment at Eichelbergers to be a violation of his employment agreement. On April 3, 2018, Allied sent a nearly identical letter to Roth. On April 19, 2018, Allied filed a Complaint alleging various claims for relief under Pennsylvania law in relation to both the Roth and Yingling Agreements, including breach of contract and misappropriation of trade secrets under PUTSA. See Complaint, 4/19/18, at ¶¶ 81-90, 107-11. In relevant part, Allied's Complaint requested the entry of preliminary injunctions against Roth, Yingling, and Eichelbergers. Id. at ¶¶ 90, 111. On the same day, Allied filed a petition and a supporting memorandum of law requesting the entry of a preliminary injunction that would: (1) enjoin Roth and Yingling from maintaining their employment at Eichelbergers; (2) direct the return of "all trade secrets and confidential information taken" allegedly misappropriated from Allied; and (3) prohibit Eichelbergers from using any such trade secrets or confidential information. See Petition for Preliminary Injunction, 4/19/18, at unnumbered 1.

On April 24, 2018, the trial court issued a rule to show cause upon Appellees. On May 7, 2018, the trial court filed an order that gave Appellees thirty days to respond to Allied's petition, and also provided for a ninety-day discovery period. Appellees timely filed an answer to Allied's petition along with new matter challenging the basis of Allied's allegations and claims for relief, which Allied answered. A hearing was held on November 14, 2018 on Allied's petition for a preliminary injunction, at which testimony was adduced from Roth, Yingling, Allied CEO Adam Santry, and Eichelbergers CEO Jerry Rice. On November 16, 2018, the trial court denied Allied's petition for a preliminary injunction, concluding that Allied had not sufficiently satisfied the legal prerequisites for the entry of such an extraordinary remedy.

Allied timely filed a notice of appeal to this Court. The trial court directed Allied to file a concise statement of errors pursuant to Pa.R.A.P. 1925(b), Allied complied, and the trial court filed its Rule 1925(a) opinion. Allied originally preserved ten separate issues for our review in its Rule 1925(b) statement; however, it has briefed only two of these alleged errors, namely: (1) whether the trial court committed reversible error in allegedly failing to "apply, discuss, or consider" PUTSA in denying Allied's request for a preliminary injunction; and (2) whether the trial court committed reversible error in denying a preliminary injunction with respect to Yingling's alleged solicitation of Rose. See Appellant's brief at 5.

Although these claims are distinct, they both implicate the trial court's refusal to enter a preliminary injunction. Our scope of review in this context is plenary. See Warehime v. Warehime , 580 Pa. 201, 860 A.2d 41, 46 n.7 (2004). Our standard of review is also well-articulated under existing precedent:

On appeal from the grant or denial of a preliminary injunction, we do not inquire into the merits of the controversy, but rather examine the record to determine if there were any apparently reasonable grounds for the action of the court below. Summit Towne Centre, Inc. v. Shoe Show of Rock Mount, Inc. , 573 Pa. 637, 828 A.2d 995, 1000 (2003). Only if it is plain that no grounds exist to support the decree or if the rule of law relied upon was palpably erroneous or misapplied will we interfere with the decision of the trial. Id. When a trial court denies a preliminary injunction, appellate review is "highly deferential." Warehime , 860 A.2d at 46. This standard requires an appellate court to examine the record to determine if there were any apparently reasonable grounds for the ruling under review. Id. An appellate court will find that "apparently reasonable grounds" exist for the denial of injunctive relief if the trial court properly has found that any of the necessary prerequisites is not satisfied. Id. See Buffalo Township v. Jones , 571 Pa. 637, 813 A.2d 659, 664 n.4 (2002) (distinguishing the standard of appellate review applicable to the grant or denial of a permanent injunction versus the standard applicable to a ruling on a motion for a preliminary injunction).

Iron Age Corp. v. Dvorak , 880 A.2d 657, 661-62 (Pa.Super. 2005). Furthermore, "[t]he proponent of a preliminary injunction faces a heavy burden of persuasion especially where, as here, the trial court has not been persuaded and has denied the injunction request." Allegheny County v. Comm. , 518 Pa. 556, 544 A.2d 1305, 1308 (1988).

The Supreme Court of Pennsylvania has set forth six essential prerequisites which a party must satisfy prior to the entry of a preliminary injunction as a general matter:

The party must show 1) that the injunction is necessary to prevent immediate and irreparable harm that cannot be adequately compensated by damages; 2) that greater injury would result from refusing an injunction than from granting it, and, concomitantly, that issuance of an injunction will not substantially harm other interested parties in the proceedings; 3) that a preliminary injunction will properly restore the parties to their status as it existed immediately prior to the alleged wrongful conduct; 4) that the activity it seeks to restrain is actionable, that its right to relief is clear, and that the wrong is manifest, or, in other words, must show that it is likely to prevail on the merits; 5) that the injunction it seeks is reasonably suited to abate the offending activity; and, 6) that a preliminary injunction will not adversely affect the public interest.

Warehime , supra at 47-48. The burden of proof with respect to these six elements falls squarely upon the party seeking injunctive relief. Id. Finally, "[i]f a petitioner fails to establish any one of the aforementioned prerequisites, a reviewing court need not address the others." Greenmoor, Inc. v. Burchick Const. Co., Inc. , 908 A.2d 310, 313-14 (Pa.Super. 2006).

In its first issue, Allied argues that the trial court erred by failing to adequately consider the import of PUTSA in denying its request for a preliminary injunction. In so doing, Allied appears to have misapprehended the relevance of PUTSA in the context of a request for a preliminary injunction. In pertinent part, PUTSA provides that it "displaces conflicting tort, restitutionary and other law of this Commonwealth providing civil remedies for misappropriation of a trade secret."⁵ 12 Pa.C.S. § 5308(a). While PUTSA may have extinguished Pennsylvania's common law tort for the...