CHILCUTT DIRECT Mktg. INC. v. A CARROLL Corp., 106

• Citation: 2010 OK CIV APP 58,239 P.3d 179
• Decision Date: 07 May 2010
• Docket Number: 961. Released for Publication by Order of the Court of Civil Appeals of Oklahoma,Division No. 4.,No. 106,106
• Parties: CHILCUTT DIRECT MARKETING, INC., an Oklahoma Corporation, Plaintiff/Appellant, v. A CARROLL CORPORATION, an Oklahoma Corporation, and James D. Hall, Jr., an Individual, Defendants/Appellees.
• Court: United States State Court of Criminal Appeals of Oklahoma. Court of Civil Appeals of Oklahoma

239 P.3d 179
2010 OK CIV APP 58

CHILCUTT DIRECT MARKETING, INC., an Oklahoma Corporation, Plaintiff/Appellant,
v.
A CARROLL CORPORATION, an Oklahoma Corporation, and James D. Hall, Jr., an Individual, Defendants/Appellees.

No. 106,961. Released for Publication by Order of the Court of Civil Appeals of Oklahoma, Division No. 4.

Court of Civil Appeals of Oklahoma,Division No. 4.

May 7, 2010.

239 P.3d 180

Appeal from the District Court of Oklahoma County, Oklahoma; Honorable Daniel L. Owens, Trial Judge.

AFFIRMED.

Timothy A. Heefner, James L. Gibbs, II, Goolsby, Proctor, Heefner & Gibbs, P.C., Oklahoma City, OK, for Plaintiff/Appellant.

Terry W. West, Bradley C. West, Gregg W. Luther, The West Law Firm, Shawnee, OK, for Defendants/Appellees.

DOUG GABBARD II, Presiding Judge.

¶ 1 Plaintiff, Chilcutt Direct Marketing, Inc. (CDM), appeals the trial court's denial of its motion for new trial following the court's overruling of its motion for an injunction under the Trade Secrets Act. For the following reasons, we affirm.

FACTS

¶ 2 The parties involved in this appeal are two direct marketing companies that are competitors, CDM and Defendant A Carroll Corporation (ACC). Defendant James D. Hall, Jr., worked for CDM for 21 years. He resigned in 2006 to work for ACC, telling CDM he would be selling software programs to doctors. He received CDM's permission to keep a copy of his computerized Outlook Address Book and his cell phone number, both of which he said he needed to stay in contact with his friends. The address book contained contact information for approximately 775 CDM customers and business contacts, and had been compiled by CDM over a 25-year period.

¶ 3 Five days after Hall left CDM, ACC began doing business as “All That Marketing,” in direct competition with CDM. Some CDM customers began placing orders with ACC. CDM requested that Defendants cease using the customer list, but its request was rejected.

¶ 4 CDM then sued ACC and Hall asserting that the customer list on Hall's Outlook Address Book was a trade secret which Defendants had misappropriated. CDM asserted theories of misappropriation of a trade secret, deceit-false representation, deceit-nondisclosure/concealment, and interference with a business relationship. It sought damages and a permanent injunction.

¶ 5 At trial, the evidence indicated that some of CDM's customers had been contacted by ACC and Hall, and had become ACC

239 P.3d 181

customers. Ultimately, the jury returned a verdict in favor of CDM, awarding $75,000 in damages. The jury specifically found that ACC and Hall had misappropriated a trade secret by using the customer list, and that Hall was also liable for deceit.

¶ 6 Immediately following the verdict, CDM asked the trial court for a permanent injunction enjoining any use of the address book and any contact with the customers listed therein for a time certain. Defendants stipulated they would return all relevant information to CDM, and only keep Hall's personal information. The trial court verbally ordered Defendants to return the list, and stated it would set a briefing schedule to determine “whether or not the defendant should be enjoined from contacting any of [CDM's] customers.”

¶ 7 Thereafter, CDM filed a motion for injunctive relief pursuant to 78 O.S.2001 § 87. CDM sought either a prohibitive injunction preventing ACC and Hall from “continued misappropriation of a trade secret,” or, alternately, a royalty injunction requiring the payment of a specified royalty for a time certain. ACC and Hall responded that both injunctions were unnecessary because they had returned the CDM customer list and purged it from their phones and computers.

¶ 8 The trial court overruled CDM's motion for an injunction. CDM then moved for a new trial, asserting an injunction was necessary to prevent Defendants from enjoying a commercial advantage due to their misappropriation. ¹ The trial court also denied this motion. CDM appeals.

STANDARD OF REVIEW

¶ 9 An injunction is an “extraordinary remedy, and relief by this means is not to be lightly granted.” Amoco Prod. Co. v. Lindley, 1980 OK 6, ¶ 50, 609 P.2d 733, 745. Generally, the right to injunctive relief must be established by clear and convincing evidence. Sharp v. 251st Street Landfill, Inc., 1996 OK 109, ¶ 5, 925 P.2d 546, 549. The granting of a mandatory injunction is largely a matter for the trial court's discretion and depends upon a consideration of all the equities between the parties. Kasner v. Reynolds, 1954 OK 56, ¶ 25, 268 P.2d 864, 867. Similarly, a trial court's decision on a new trial motion is a matter reviewed for abuse of discretion, and will not be disturbed on appeal unless it clearly appears the court erred in “some pure simple question of law or acted arbitrarily.” Poteete v. MFA Mut. Ins. Co., 1974 OK 110, ¶ 24, 527 P.2d 18, 22.

ANALYSIS

¶ 10 Whether an employer may obtain an injunction prohibiting a former employee from using a list of the employer's customers has been the subject of frequent litigation over a number of years. In Brenner v. Stavinsky, 1939 OK 131, 184 Okla. 509, 88 P.2d 613, the Oklahoma Supreme Court addressed this question and stated:

It is generally held that, in the absence of a contract to the contrary, a former employee may upon entering the competitive field with his erstwhile employer, either as the employee of another or on his own initiative, solicit the business of the latter's customers.... [A] contrary view would compel the employee “to give up all the friends and business acquaintances made during the previous employment” and “tend to destroy the freedom of employees and reduce them to a condition of industrial servitude.” Fulton Grand Laundry Co. v. Johnson, 140 Md. 359, 117 A. 753, 23 A.L.R. 420 [ (1922) ]....

* * *

[A] list of customers built up through years of effort in a line of business where such a list constitutes an important asset of business is a species of property in the nature of or comparable to a trade secret, and that where an employee obtains such a list through confidence placed in him or surreptitiously, he may be restrained from using it. This court would be loath to say, however, that the use by a former employee

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of his memory independent of any compiled list could be restrained, in the absence of a contract to the contrary.

Id. at ¶¶ 10 & 16, 88 P.2d at 614, 615. In Central Plastics Co. v. Goodson, 1975 OK 71, 537 P.2d 330, the Oklahoma Supreme Court repeated the principle that “in the absence of an express prohibitory agreement, the employee may on a change of employment solicit such customers as long as he proceeds from his memory rather than by the unauthorized use of a list of customers.” Id. at ¶ 21, 537 P.2d at 334. The Court stressed that equity does not protect names and addresses that are remembered or that are easily ascertainable by observation or by reference to directories. ²

¶ 11 The case at bar was brought under the provisions of Oklahoma's Uniform Trade Secrets Act,...