Corp. Lodging Consultants v. Szafarski
| Decision Date | 20 August 2021 |
| Docket Number | 1:21-CV-1611 |
| Parties | Corporate Lodging Consultants, Inc., Plaintiff, v. Mary Szafarski, et al., Defendants. |
| Court | U.S. District Court — Northern District of Ohio |
This matter comes before the Court upon Plaintiff Corporate Lodging Consultants, Inc.'s Motion for Temporary Restraining Order, Preliminary Injunction, and Expedited Hearing, which was filed on August 18, 2021. (Doc. No. 3.) The Court conducted a telephonic conference with counsel for Plaintiff, counsel for Defendant Mary Szafarski, and Robert Campbell, CEO of Campbell Resources, Ltd. on August 19 2021.[1] For the following reasons, Plaintiff's Motion is GRANTED IN PART and DENIED IN PART, as set forth below.
The Verified Complaint contains the following factual allegations. Plaintiff Corporate Lodging Consultants, Inc. (hereinafter “Plaintiff” or “CLC”) is a Kansas corporation that provides “comprehensive lodging solutions for businesses by streamlining long-term and project-based lodging for workforces.” (Doc. No. 1 at ¶¶ 15, 16.) It specializes in providing cost effective lodging solutions for its corporate clients and has been in business for over 40 years. (Id. at ¶ 21.)
Plaintiff has negotiated exclusive pricing with over 15, 000 hotels and “relies on its relationships with vendors and the goodwill that it has generated with customers over decades.” (Id. at ¶¶ 22, 23.) Plaintiff alleges that, over time, it has developed a proprietary sales model, “which includes prospecting, identifying, and qualifying potential corporate clients.” (Id. at ¶ 25.) Sales information (including client contact information, preferences, travel pattern analytics, and sales notes) is stored in Plaintiff's Customer Relation Management (“CRM”) software, known as “Salesforce.” (Id. at ¶ 26.) According to Plaintiff, “[d]eveloping one customer account could cost upwards of hundreds of thousands of dollars.” (Id. at ¶ 27.) Information about “thousands of customers and potential customers is stored in Salesforce.” (Id.) Additionally, Plaintiff stores confidential pricing information, contract details, room usage, and other sales metrics in its internal Intranet. (Id. at ¶ 28.) Finally, Plaintiff maintains proprietary software platforms (known as Talon and Genesis) which also “house a wealth of customer information and which CLC operates so that its sales personnel will have reliable access to key information when taking care of customers.” (Id. at ¶ 29.)
Plaintiff alleges that it takes “a number of steps to protect its critical information concerning business and sales strategies, pricing, and customer relationships from being available to competitors . . . includ[ing]: (1) confidentiality agreements and restrictive covenants executed by sales executives and key employees; (2) IT security, such as password protection, termination of access rights at the close of employment, and safeguards to prevent the computer system from being hacked; (3) exit procedures, including exit memoranda sent to departing employees and exit interviews, in which departing employees are reminded of their obligations to return all CLC proprietary materials and information; and (4) need-to-know restrictions that limit access to confidential information to particular employees.” (Id. at ¶ 30.) In addition, Plaintiff maintains various policies to protect its confidential information, including policies covering Corporate Opportunities, Protection and Proper Use of Company Assets, Confidentiality, Theft, Comdata Property, and Electronic Media Policies. (Id. at ¶ 32.)
Defendant Mary Szafarski began working for Plaintiff as a Senior Sales Director but was later demoted to a Junior Sales Director. (Id. at ¶ 33.) Melissa Smith nee Stevens (who is not named as a Defendant) was also employed by Plaintiff as a Junior Sales Director during this time frame. (Id. at ¶ 34.) As Sales Directors, both Szafarski and Smith could access and view information related to clients stored in the CRM, including “point of contact for the client, contact information, the salesperson servicing the account, notes related to the client and client preferences, as well as opportunities reports and historical data.” (Id. at ¶ 36.) Szafarski and Smith also had access to Plaintiff's Intranet, which included contract terms, hotel usage reports, and pricing for specific vendors, and negotiated pricing for specific customers. (Id. at ¶ 37.) Lastly, Szafarski and Smith had access to Monthly Production Reports, which included “the names of hundreds of clients, the projections for those clients, and the actual productions of clients.” (Id. at ¶ 38.)
Smith executed an “Employment Covenants Agreement” with Plaintiff on December 18, 2014, which is attached to the Verified Complaint as Exhibit A. (Doc. No. 1-2.) This Agreement contains confidentiality, non-competition, and non-solicitation provisions. (Id.) Plaintiff does not allege that Defendant Szafarski executed an employment agreement during her tenure at CLC. Rather, Plaintiff alleges that, on March 30, 2018, Szafarski “received and acknowledged” a document entitled “Employee's Non-Disclosure and Noncompetition Agreement.” (Doc. No. 1 at ¶ 40; Doc. No. 1-3.) In response to receiving this document, Szafarski states “I will print this out and review.” (Doc. No. 1-3 at PageID# 37.)
On May 5, 2021, Smith resigned her employment with Plaintiff and began working for Defendant Campbell Resources Ltd. (hereinafter “Campbell”) as a National Sales Manager. (Doc. No. 1 at ¶¶ 53, 63.) The following month, on June 4, 2021, Defendant Szafarski also resigned from Plaintiff and began working for Campbell as a National Sales Manager, allegedly having been recruited by Smith. (Id. at ¶¶ 54, 63.) Both Szafarski and Smith attended exit interviews, during which “they were reminded [by Plaintiff] of their obligations to safeguard CLC's confidential information and trade secrets as well as to return any of CLC's tangible or intellectual property.” (Id. at ¶ 55.) Both Szafarski and Smith returned their company laptops and Plaintiff subsequently terminated Smith's access to Plaintiff's remote desk-site and Salesforce. (Id. at ¶ 56.) However, due to an “internal error, ” Szafarski's access to CRM (including Salesforce) was not terminated when her employment ended. (Id. at ¶ 7.)
Plaintiff alleges that Campbell “is a travel company, seeking to expand into the workforce lodging market.” (Id. at ¶ 18.) Plaintiff alleges that Campbell “built its reputation as a business and leisure travel company catering to individuals and companies under the brand name Campbell Travel.” (Id. at ¶ 61.) Campbell helped its clients coordinate hotels, airfare, and vehicle rental primarily through the Global Distribution System but, according to Plaintiff, Campbell “did not specialize in workforce lodging, consolidated billing, or offering proprietary rates.” (Id.) Plaintiff alleges that Campbell recently “launched a new brand - Campbell Lodging - which directly competes with CLC for corporate clients in need of workforce lodging solutions.” (Id. at ¶ 62.) Plaintiff claims that “Campbell hired Smith and Szafarski to serve as National Sales Managers for its new venture in workforce lodging - positions that are substantially similar to their roles at CLC.” (Id. at ¶ 63.)
On August 2, 2021, Plaintiff (through its General Counsel Edward Grasse) sent Cease and Desist Letters to Campbell, Szafarski, and Smith. (Id. at ¶ 67.) See also Doc. No. 1-6. Despite receiving these letters, however, Defendants allegedly “continued their nefarious conduct without remorse.” (Doc. No. 1 at ¶ 67.) In particular, Plaintiff alleges that Szafarski at which time she “reviewed contact information and opportunity reports for a multitude of CLC clients with whom she did not work while employed by CLC.” (Id. at ¶ 68.) Citing Log-in Activity reports obtained from Salesforce, Plaintiff claims that Szafarski accessed Salesforce nineteen (19) times between June 6, 2021 and August 4, 2021. (Id. at ¶ 69.) See also Doc. No. 1-7. The Verified Complaint sets forth a chart identifying the information accessed by Szafarski during this time period. (Doc. No. 1 at ¶ 71.) Among other things, this chart indicates that, after she left her employment at CLC, Szafarski accessed CLC's account information regarding over twenty of Plaintiff's clients. (Id.) Szafarski also allegedly accessed contact information regarding various clients, as well as internal CLC reports entitled “Opps Closing Next 30 Days-Field Sales” and “Opps Closed- QTD- Field Sales.”[2] (Id.) In addition, Szafarski allegedly “analyzed the user profile of Smith, which includes information regarding the accounts Smith serviced and the opportunities Smith developed while employed by CLC.” (Id. at ¶ 72.)
On August 4, 2021, Plaintiff froze Szafarksi's account. (Id. at ¶ 77.) Two days later, on August 6, 2021, Plaintiff (through outside counsel) sent a second Cease and Desist Letter, this time addressed to Szafarski, Smith, and attorney Gena Gold. (Doc. No. 1-8.) Therein, Plaintiff states as follows:
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