Carboline Co. v. Lebeck

• Decision Date: 22 December 1997
• Docket Number: No. 4:97CV2366 CDP.,4:97CV2366 CDP.
• Citation: Carboline Co. v. Lebeck, 990 F.Supp. 762 (E.D. Mo. 1997)
• Parties: CARBOLINE COMPANY, Plaintiff, v. Mark LEBECK and PPG Industries, Inc., Defendants.
• Court: U.S. District Court — Eastern District of Missouri

Page 762

990 F.Supp. 762

CARBOLINE COMPANY, Plaintiff, v. Mark LEBECK and PPG Industries, Inc., Defendants.

No. 4:97CV2366 CDP.

United States District Court, E.D. Missouri, Eastern Division.

December 22, 1997.

Timothy J. Sarsfield, Richard E. Jaudes, Aaron C. Baker, Thompson, Coburn, St. Louis, MO, for Plaintiff.

Fred A. Ricks, Jr., Christine M. Kocot, McMahon and Berger, St. Louis, MO, for Defendants.

MEMORANDUM AND ORDER

PERRY, District Judge.

This matter is before the Court on plaintiff's motion for preliminary injunction. A hearing on this matter was commenced on December 5, 1997, and concluded on December 11, 1997. The parties thereafter submitted briefs and proposed orders. For the reasons that follow, the Court will deny the plaintiff's request for a preliminary injunction.

I. Relevant Factual Background

Plaintiff Carboline Company manufactures high performance protective coatings. Defendant Mark Lebeck began his employment with Carboline in 1990 as a General Manager of Sales in the power industry division. On May 1, 1990, Lebeck signed an employment agreement requiring him not to disclose confidential information during and after his employment. The Agreement also contained a noncompete provision under which he agreed not to, "either directly or indirectly, go into any business in competition with Employer within the United States for a period of at least two years" after his termination.

For the power industry Carboline designs, tests, and sells products to electrical utilities, including nuclear power plants, in all fifty states. While conventional power plants can use Carboline's standard formulations, the nuclear industry requires specialized coatings that comply with Nuclear Regulatory Commission regulations. Carboline and Keeler & Long are currently the leading producers of nuclear coatings. Until the fall of 1996, Lebeck had responsibility for pricing strategies, product development and testing, directing regional managers, and determining customer priorities, within the United States, Canada, and some overseas regions, for Carboline's power industry business. For example, in May 1995, Lebeck drafted a memorandum to sales personnel introducing a twelve-point sales strategy aimed at increasing the level of business from Carboline's current nuclear customers. Paul Litszinger, Carboline's Senior Vice President of Sales and Marketing, testified that Lebeck knew the needs, sales, costs, plans, pricing, and profit margins for each power industry customer.

With the advent of industry deregulation and a reduction in the construction of new power plants, Carboline's power division sales declined. Carboline downsized the power division and, in the fall of 1996, transferred Lebeck from the power industry division to distribution, with responsibility for the southeast United States. His new position was essentially a sales role, with responsibility for both power industry customers as well as other customers in his territory.

On March 14, 1997, Carboline offered Lebeck a choice between accepting a sales position in Los Angeles, California, or leaving his employment with Carboline. The transfer position did not have a power industry focus, although, like all Carboline sales persons, Lebeck would call on those power customers in his sales territory. Lebeck testified that he initially considered the transfer, although he had earlier expressed reservations about accepting a position which required relocating his family. In a letter written on April 17, 1997, Lebeck declined the transfer, accepted Carboline's offer of a severance package, and asked to be "totally released" from "any contractual obligations."

On April 30, 1997, after discussions with Carboline, Lebeck signed a termination agreement and mutual release drafted by Carboline. The current dispute arises from the meaning of several provisions in that agreement and the relevant language is set out below. Before signing the agreement, Lebeck announced his intention to accept employment with Vanex, Inc. Although Vanex also manufactures industrial coatings, Carboline managers testified that they did not consider that Lebeck's employment with Vanex would violate his noncompete agreement. Lebeck began working for Vanex in May of 1997.

On September 19, 1997, Lebeck accepted an employment offer from PPG for a sales manager position in its high performance coatings division. As a PPG employee, Lebeck has accompanied PPG dealers on calls to customers, many of whom also purchase from Carboline and whom Lebeck had worked with as a Carboline employee. In October, upon hearing of Lebeck's employment with PPG, Carboline notified PPG that it considered Lebeck to be in violation of his noncompete agreement.

Plaintiff filed the instant suit in November 25, 1997, bringing against Lebeck claims of breach of contract (Count I) and breach of the duty of loyalty (Count IV); against PPG a claim of intentional interference with contract (Count III); and against both defendants claims of civil conspiracy (Count II), misappropriation of trade secrets pursuant to Missouri common law and the Missouri Uniform Trade Secrets Act, Mo.Rev. Stat. §§ 417.450 et seq. (Count V), and tortious interference with business relationships (Count VI). Plaintiff's motion for a temporary restraining order was denied on November 25, 1997, after a hearing at which all parties were represented. Carboline now asks the Court to issue a preliminary injunction restricting Lebeck's employment to preclude him from disclosing or using confidential information, working with specified Carboline customers until April 30, 1999, and working for PPG's recent acquisition, Keeler & Long.

Sometime during the pendency of these proceedings, PPG purchased Keeler & Long, Inc. Keeler & Long is Carboline's top competitor in its nuclear power business. Lebeck worked for Keeler & Long for six years before coming to Carboline. Lebeck testified that he has not been approached regarding a possible role with Keeler & Long.

The May 1, 1990, employment agreement contained the following relevant provisions:

2. Employee ... will treat as confidential and will not disclose, to any third party, any information concerning Employer's business or concerning inventions, processes or methods developed by Employee or by other employees without the written consent of an executive officer ..., whether during or after employment by Employer; and Employee further agrees that upon the termination of said employment, he will not take with him any drawings, blueprints, laboratory notes, formula sheets, or any other matters herein above referred to without the prior written consent of an executive officer.

3. Employee further agrees that he will not, either directly or indirectly, go into any business in competition with Employer within the United States for a period of at least two years following the termination of Employee's employment with Employer. Employee further agrees that he will not within said last-named two-year period, accept employment or in any other way become associated with any other person, firm or corporation within the territorial limits of the United States, which person, firm or corporation is, either directly or indirectly, in competition with the Employer. Employee acknowledges that at the present time Employer is presently engaged in the nationwide selling of corrosion-resistant coatings, seamless flooring systems, industrial coatings and related products. Termination as used herein shall mean termination for whatever the cause thereof and by whomever made.

Elsewhere, the agreement defined "confidential information" as including, but not limited to, "formulae, technical data, performance data, customer's list, [and] product specifications."

The April 30, 1997 "Termination Agreement and Mutual Release" contains the relevant following provisions:

WHEREAS, the parties desire to resolve all matters arising out of Mr. Lebeck's employment by Employer and his subsequent resignation, ...

3. Employer hereby releases, remises, and forever discharges Mr. Lebeck, his agents, assigns and/or heirs, from any and all claims or other causes of action it may have against Mr. Lebeck on account of any contract, supposed liability, or other thing done or omitted, for all time in the past to the effective date of this [agreement].

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5. Mr. Lebeck acknowledges that this [agreement] has been reviewed in detail with him, and that its language and intended effect have been explained. ... Mr. Lebeck also acknowledges that he has voluntarily entered into this [agreement] of his own free will based only upon the terms and conditions set out herein.

Notwithstanding any other provision of this [agreement], Employer agrees that Mr. Lebeck is not precluded from applying for and receiving unemployment compensation benefits. Nor does this effect Mr. Lebeck's right to obtain his pension/retirement monies due him.

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9. This [agreement] shall be governed by and construed in accordance with the law of the state of Missouri. This Termination Agreement and Mutual Release constitutes the entire agreement between Employer and Mr. Lebeck and supersedes all prior understandings, whether oral or written, between Employer and Mr. Lebeck.

II. Discussion

In determining whether to issue injunctive relief, the Court must decide whether the balance of equities so favors the movant that justice requires the Court to intervene to preserve the status quo until the merits of the dispute are decided. Dataphase Systems, Inc. v. CL Systems, Inc., 640 F.2d 109, 113 (8th Cir.1981); see also Devose v. Herrington, 42 F.3d 470, 471 (8th Cir. 1994). In making its determination, the Court must consider the following four factors: (1) the threat of irreparable harm to the movant; (2) the state of balance between harm to the movant and the injury that granting the injunction would inflict on other parties; (3) the probability of success on the merits;...