Bryan v. Hall Chemical Co.
| Citation | 993 F.2d 831 |
| Decision Date | 21 June 1993 |
| Docket Number | No. 93-8034,93-8034 |
| Parties | 8 IER Cases 996 Edward E. BRYAN, Plaintiff-Appellee, v. HALL CHEMICAL COMPANY, Defendant-Appellant. |
| Court | United States Courts of Appeals. United States Court of Appeals (11th Circuit) |
William A. Clineburg, Jr., Michael W. Johnston, Suzanne C. Auclair, Atlanta, GA, for defendant-appellant.
Griffin Bell, Jr., Fisher & Phillips, Atlanta, GA, for plaintiff-appellee.
Appeal from the United States District Court for the Northern District of Georgia.
Before KRAVITCH and HATCHETT, Circuit Judges, and ATKINS *, Senior District Judge.
In this case arising out of the district court's granting of a preliminary injunction in favor of the appellee, Edward E. Bryan, a former employee of the appellant, The Hall Chemical Company, we affirm the district court's order, vacate the suspension of the injunction pending appeal, and reinstate the preliminary injunction.
The Hall Chemical Company (Hall) is an Ohio corporation with its headquarters and principal place of business in Ohio. Hall manufactures inorganic and organic salts termed commodity chemical products. Edward E. Bryan is a chemist with a bachelor's and a master's degree in chemistry, who began employment with Hall in November, 1983. Prior to his employment with Hall, Bryan worked in the chemicals industry for twenty-three years beginning in 1960 as a research chemist. Bryan also has extensive experience in sales and marketing of catalysts to the petrochemical, petroleum refining, and oil industries. He worked in metal refining and nickel and cobalt reclamation. In 1983, Hall hired Bryan to work on an inorganic metal reclamation project which ultimately failed. Bryan also had sales responsibilities for Hall in the southeast region of the United States. In 1986, Bryan began full-time sales as domestic sales manager for Hall. Thereafter, Bryan received a $5,000 raise, as reflected on Hall's payroll change form dated December 22, 1986. Hall also promoted Bryan to vice president of sales-North America, advising Bryan of this by letter dated December 29, 1986.
On January 14, 1987, Bryan signed Hall's standard noncompete and nondisclosure agreement (agreement), restricting Bryan's employment during and after employment with Hall. Paragraph 3 of the agreement provides for restrictions upon Bryan's conduct, and reads, in pertinent part, as follows:
During the period of the Employee's employment with the Company and for a period of two years after termination of the Employee's employment with the Company, Employee will not directly or indirectly:
(1) with respect to any product now or hereafter (during the term of his employment) manufactured or sold by the Company or which is competitive with any such product, call upon or solicit business from, directly or indirectly, without the Company's written consent, any customer or supplier of the Company with which the Company did business while the Employee was employed by the Company, or become employed by or in any way directly or indirectly render services to any person, firm, or corporation engaged in the manufacture and/or sale of any such products, or
(2) attempt in any way to secure for himself or another, profit, employment or any other advantage by the use, exploitation, sale, disclosure or implementation of any confidential or proprietary information belonging to the Company or the knowledge of which Employee acquired in the course of and during the term of Employee's employment with the Company (including the information described in paragraph 4).
In 1988, Hall merged with a subsidiary of Goldman Financial Group, Inc. Although Goldman Financial Group requested the officers and directors of Hall to sign resignation letters, the merger did not disrupt Bryan's position with Hall, and he remained a vice president with no disruption or change in pay or benefits.
In May, 1992, Hall promoted Bryan's subordinate, Edward Stasen, to Bryan's position as vice president of sales and marketing, demoting Bryan to vice president of southern sales. In August, 1992, The Shepherd Chemical Company (Shepherd), one of Hall's two primary domestic competitors, offered Bryan employment in sales and marketing development. On August 24, 1992, while still a Hall vice president, Bryan accepted Shepherd's offer of employment to begin working at Shepherd on September 14, 1992.
Hall's strategic planning meeting began on the evening of August 31, 1992. Twenty to twenty-five of Hall's managers and key employees attended this meeting, though Hall's chief executive officer did not attend. Although Bryan attended the August 31 and September 1 meetings, Stasen, Bryan's supervisor at the time, testified that he convinced Bryan to attend, but Bryan did not want to do so. At the end of the planning meeting on September 1, Bryan resigned in the presence of Hall management. Bryan then began work as scheduled at Shepherd, with his place of employment remaining in Marietta, Georgia, where he and his family lived. During employment with Hall, Hall maintained Bryan's office at his residence in Marietta.
On October 7, 1992, Bryan received a letter from counsel for Hall stating that Bryan must cease his employment with Shepherd, pursuant to the agreement. Hall's counsel also sent a similar letter to Shepherd's president, referencing Bryan's agreement with Hall and informing Shepherd that Hall intended to enforce the agreement. Shepherd thereafter discussed the matter with Bryan and concluded that Bryan should cease rendering services to Shepherd. Bryan's employment with Shepherd ended on October 19, 1992.
Bryan filed this lawsuit on November 6, 1992, seeking a declaratory judgment and injunctive relief to prevent enforcement of the agreement arising out of his employment with Hall. Bryan also sought, pursuant to Federal Rule of Civil Procedure 65, a temporary restraining order and a preliminary injunction enjoining Hall from attempting to enforce the agreement. On November 6, 1992, the district court temporarily restrained Hall from taking any action to enforce the agreement. Thereafter, the parties filed briefs in support of their positions, and the district court held numerous hearings as to Bryan's motion for a preliminary injunction. On December 30, 1992, the district court issued its order granting Bryan a preliminary injunction enjoining Hall from attempting to enforce any of the restrictive covenants contained in the agreement until further order of the district court. The district court found that Ohio law applied to the agreement at issue under this court's reasoning in Nordson Corp. v. Plasschaert, 674 F.2d 1371 (11th Cir.1982).
Based on the court's finding that Hall did not give any consideration for Bryan's execution of the agreement, the court concluded that Bryan met the first prerequisite for obtaining a preliminary injunction--that a substantial likelihood existed that he would prevail on the merits of his claim. The district court reasoned that Ohio law considers a restrictive covenant agreement void "for want of consideration where it was not included in the original contract of employment, but in a subsequent contract for continuance of employment and was strictly for the protection of the employer." Cohen & Co. v. Messina, 24 Ohio App.3d 22, 492 N.E.2d 867, 871 (1985). The district court determined that if Hall enforced the agreement, "the plaintiff [Bryan] would be virtually unemployable in the industry in which he has spent most of his life." Based on this finding, the district court concluded that enforcement of the agreement would result in irreparable injury to Bryan because of his inability to work in his chosen field. The district court found that Hall possessed "few, if any, true trade secrets in the industry...." * Thus, the court held that the threatened injury to Bryan if Hall enforced the agreement outweighed the threatened harm to Hall if the court granted the preliminary injunction. The district court finally found that ordering a preliminary injunction enjoining enforcement of the agreement would not disserve any public interest.
Based on these findings, the district court issued its order granting a preliminary injunction enjoining Hall from enforcing the agreement. On January 8, 1993, Hall appealed the district court's order and requested this court to suspend the preliminary injunction pending appeal. On February 5, 1993, this court granted Hall's motion and suspended the injunction pending appeal.
Hall contends that the district court's issuance of the preliminary injunction contradicts principles of equity and is an abuse of the district court's discretion. Hall contends that Bryan did not come into court with clean hands, and therefore, the district court's granting Bryan equitable relief in the form of a preliminary injunction violated the clean hands doctrine. Hall also contends that the district court's findings that Hall possessed few, if any, true trade secrets and that Hall did not give consideration for Bryan's execution of the agreement were clearly erroneous. Hall also contends that the district court abused its discretion in limiting Hall's cross-examination of one of Bryan's witnesses. Bryan contends that the district court properly granted his motion for a preliminary injunction, the district court did not abuse its discretion, and its findings were not clearly erroneous.
This appeal involves the following issues: (1) whether the district court erred in determining that Ohio law governed the dispute; (2) whether Bryan's activities prior to resigning from Hall precluded equitable relief; (3) whether the district court abused its discretion in granting the preliminary injunction; and (4) whether the district court abused its discretion during Hall's cross-examination of one of Bryan's witnesses.
A preliminary issue is whether the district court's determination that Ohio law...
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