Digitel Corp. v. Deltacom, Inc.

• Decision Date: 14 November 1996
• Docket Number: Civil Action No. 96-D-106-S.
• Citation: 953 F.Supp. 1486
• Parties: DIGITEL CORPORATION, a Georgia Corp., Plaintiff, v. DELTACOM, INC., an Alabama Corporation, Richard A. Wilkins, John A.R. Smith, and Edward L. Blackwell, Defendants.
• Court: U.S. District Court — Middle District of Alabama

953 F.Supp. 1486

DIGITEL CORPORATION, a Georgia Corp., Plaintiff, v. DELTACOM, INC., an Alabama Corporation, Richard A. Wilkins, John A.R. Smith, and Edward L. Blackwell, Defendants.

Civil Action No. 96-D-106-S.

United States District Court, M.D. Alabama, Southern Division.

November 14, 1996.

COPYRIGHT MATERIAL OMITTED

Douglass Taylor Flowers, Lewis, Brackin & Flowers, Dothan, AL, Michael W. Johnston, Scott G. Blews, King & Spalding, Atlanta, GA, for Digitel Corporation.

James N. Nolan, John B. Tally, Jr., Joseph D. King, Lange, Simpson, Robinson & Somerville, Birmingham, AL, for Deltacom, Inc.

Cameron A. Metcalf, Espy & Metcalf, P.C., Dothan, AL, for Richard A. Wilkins.

John A.R. Smith, Dothan, AL, pro se.

William C. Carn, III, Lee & McInish, Dothan, AL, Michael W. Johnston, Scott G. Blews, King & Spalding, Atlanta, GA, Larry Keith Anderson, Dothan, AL, for Edward L. Blackwell.

Michael W. Johnston, Scott G. Blews, King & Spalding, Atlanta, GA, Larry Keith Anderson, Dothan, AL, for Edward L. Blackwell.

MEMORANDUM OPINION AND ORDER

DE MENT, District Judge.

Pending before the court is "Plaintiff's Motion for Preliminary Injunction, Expedited Discovery and a Hearing," filed January 19, 1996. A hearing in chambers was held in this matter on April 12, 1996, and the parties agreed that the Court should resolve plaintiff's motion without conducting an evidentiary hearing. Pursuant to the court's orders entered March 20, 1996, and April 17, 1996, each party has submitted briefs and evidence to support its contentions.¹ After careful consideration of the arguments of counsel, the relevant case law and the record as a whole, the court finds that the plaintiff's motion for preliminary injunction is due to be granted in part and denied in part.

BACKGROUND

Plaintiff, Digitel Corp. ("Digitel") is a Georgia corporation engaged in the business of selling and providing service for telecommunications systems and equipment. Pl.'s Br. (1/19/96) at 1. Defendants Richard A. Wilkins ("Wilkins"), John A.R. Smith ("Smith"), and Edward L. Blackwell ("Blackwell") worked in Digitel's Dothan office, conducting business in Dothan and the surrounding areas. Id. Wilkins, Smith and Blackwell are currently employed by Defendant DeltaCom, Inc. ("DeltaCom"). Harwell Aff. ¶ 9; Blackwell Dep. at 24-25. Like Digitel, DeltaCom is also in the business of selling long distance telephone services, telephone systems (i.e., telephone equipment) and debit cards for prepaid long distance services. Harwell Aff. ¶ 3.

Digitel has filed a Complaint seeking relief against DeltaCom, Wilkins and Smith for breach of non-solicitation agreements, against Wilkins and Smith for misappropriation of trade secrets, against DeltaCom for tortious interference with Wilkins' and Smiths' employment agreements and with Digitel's contractual and business relations, and against Blackwell and Wilkins for tortious interference with contractual and business relations, conversion and misappropriation of trade secrets. Pl.'s Br. (1/19/96) at 1. Additionally, Digitel has requested a preliminary injunction enjoining DeltaCom, Wilkins and Smith from contacting, soliciting or accepting business from former Digitel customers or prospective Digitel customers with whom Wilkins and/or Smith had contact while employed with Digitel.²

Operating out of Dothan, Alabama, Digitel and DeltaCom are both telecommunications businesses engaged in the business of providing telephone services and equipment to commercial enterprises. Digitel came to the Dothan area in September, 1989, after purchasing the assets, inventory, customer base and goodwill of the telecommunications business of TelPlus Communications, Inc. in Alabama and the Florida panhandle. Tate Aff. at ¶ 4. Digitel's primary focus is on equipment sales and service and its revenues in 1995 were approximately $11 million. Id. at ¶¶ 2, 3.

DeltaCom, on the other hand, is a company primarily providing long distance telephone services, operating in Florence, Huntsville, Birmingham, Montgomery, Mobile and Dothan, Alabama, as well as New Orleans and Baton Rouge, Louisiana, and Atlanta, Georgia. Harwell Aff. at ¶ 3. DeltaCom's revenues in 1995 were approximately $57 million. McDonald Dep. at 56-57. DeltaCom entered the Dothan area in 1987 when it acquired a small long distance company called Watts America, but it did not actively solicit telephone equipment in the Dothan area until October, 1995. Harwell Aff. at ¶ 5; McDonald Dep. at 66. Prior to October, 1995, DeltaCom and Digitel often found themselves sharing customers, with DeltaCom providing a long distance service and Digitel providing the telephone equipment. Id. at ¶ 6. In fact, the two companies would sometimes prepare joint proposals to customers, or DeltaCom's long distance salespeople would recommend Digitel equipment to their long distance customers, while Digitel would recommend DeltaCom as a long distance carrier. Id.

DeltaCom and Digitel at no time entered into an agreement precluding DeltaCom from soliciting hardware and service business from any customer in the Dothan area. DeltaCom's Second Br. at 3. In October, 1995, DeltaCom decided to actively compete with Digitel by entering into the telephone equipment sales and service market. Having obtained "better operational control" of its telephone equipment sales divisions in Huntsville and Birmingham, DeltaCom decided to establish an equipment sales and service division in Dothan. McDonald Dep. at 67-70.

Before November, 1995, Digitel had four employees in its Dothan office: Wilkins, the senior manager for Alabama and Northwest Florida; Smith, an account executive/salesperson; Blackwell, a service technician; and Brian Poole, another service technician.³ Wilkins Dep. at 20-22; Smith Dep. at 67, 42. Wilkins began working for Digitel in April 1991, or 1992, as a sales representative and eventually he was promoted to general manager. Wilkins Dep. at 13, 20. Smith joined Digitel some time later, around 1994. Smith Dep. at 24. Both men, as part of their compensation plan, had agreed to a non-solicitation provision which stated in part:

I also agree that due to the sensitively [sic] and confidentially [sic] of materials and information which will be divulged to me, that I will refrain for a period of two years from termination, from soliciting or accepting, directly or through others, any business from any of Digitel's customers, including actively sought perspective [sic] customers with whom I have had contact with during my employment with Digitel .. [sic] I also understand that this documentation is intended to describe the method of compensation and should not be considered as a contract on my part, or the part of Digitel Corporation for employment for any specific term.

Wilkins' General Manager's Compensation Plan ("GM Plan") and Digitel Corp. Account Executive Sales Compensation Program ("AES Program"). Smith signed this agreement on January 20, 1995, with Rick Wilkins signing as Smith's supervisor. See AES Program.⁴ Wilkins signed his own agreement on January 16, 1995, with Bryan Tate, President of Digitel, also signing the agreement. See GM Plan. Wilkins' general managers' compensation agreement was subsequently modified with new bonus incentives but still contained a non-solicitation provision. Id. Wilkins, however, did not return the modified agreement to the Human Resources Department because of some concerns he had regarding the two-year time provision in the non-solicitation clause.⁵ Wilkins Dep. at 75-76. Nevertheless, Wilkins signed the modified agreement on February 13, 1995, and he acknowledges that he was paid by Digitel under the modified compensation plan until his employment with Digitel was terminated. Id. Blackwell does not appear to have signed a non-solicitation agreement.

In August or September, 1995, Wilkins, apparently discontented with Digitel, contacted David Harwell ("Harwell"), sales manager at DeltaCom, about working for DeltaCom as a telephone equipment sales representative.⁶ Wilkins Dep. at 28-29, 33. In mid to late Fall, 1995, Wilkins met in Dothan with Harwell, Eric Watson ("Watson") who was Harwell's supervisor, and Elisah Kusan ("Kusan"), who served as DeltaCom's technical or engineering department head, to discuss the possibility of Wilkins working for DeltaCom. Id. at 33-35. Wilkins, along with Smith, Blackwell and Poole, attended a second meeting in Dothan with DeltaCom executives, Harwell, Watson and Kusan. Id. at 37-38. At this second meeting, they discussed the possibility of the Digitel employees working for DeltaCom and the market possibilities in the South Alabama area. Id. at 46-47. On November 16 or 17, 1995, DeltaCom sent offers of employment to Wilkins, Smith, Blackwell and Poole. Blackwell Dep. at 24. Wilkins, Smith and Blackwell then submitted their resignations on November 17, 1995, with Wilkins' and Smith's resignations becoming effective December 1, 1995, and Blackwell's resignation becoming effective December 3, 1995. Blackwell Dep. at 25, 56; Wilkins Dep. at 102-03. Digitel then released Wilkins and Smith from their duties on November 18 or 19, 1995. Wilkins Dep. at 104-06. Eventually, all four Digitel employees were working at DeltaCom: Wilkins, Smith, Blackwell and Poole. Smith Dep. at 42. DeltaCom was aware of Smith's and Wilkins' non-solicitation clauses before hiring them. Harwell Aff. at ¶ 10. Smith discussed the non-solicitation clauses with both Harwell and Watson, and, perhaps with Kusan, and he "faxed" a copy of the clause to Harwell. Smith Dep. at 59-67. Specifically, Smith discussed the clause with Harwell to ensure that the clause "would not be a problem for him." Id. at 60. According to Smith, Harwell stated that from DeltaCom's perspective, the clause was not a problem and there was no need for Smith to "worry about it." Id. at 61. Smith also states that "at some point in time" Harwell and Watson "emphasized again very clearly not to solicit...