DJR Assocs., LLC v. Hammonds

Decision Date13 March 2017
Docket NumberCase No. 2:16–cv–1729–TMP
Parties DJR ASSOCIATES, LLC, Plaintiffs, v. Terry HAMMONDS, SPI Chemicals, LLC., Defendants.
CourtU.S. District Court — Northern District of Alabama

Ben Bainbridge Robinson, Thomas A. McKnight, Jr., Albert L. Jordan, Wallace Jordan Ratliff & Brandt LLC, Birmingham, AL, for Plaintiffs.

Corey Joseph Myers Goerdt, Michael P. Elkon, Fisher Phillips LLP, Atlanta, GA, Marion F. Walker, Mfwalker Law Group, Birmingham, AL, for Defendants.

MEMORANDUM OPINION

T. MICHAEL PUTNAM, UNITED STATES MAGISTRATE JUDGE

This cause came before the court on January 5, 2017, for a hearing on the plaintiff's motion for a preliminary injunction. Plaintiff filed its original Complaint and Request for Preliminary and Permanent Injunction in the Circuit Court of Jefferson County, Alabama, on October 13, 2016. The defendants removed the action to this court on October 21, 2016. The court conducted a telephonic conference with the parties on October 24, 2016, as a result of which the parties consented to the dispositive jurisdiction of the undersigned magistrate judge pursuant to 28 U.S.C. § 636(c) on October 25, 2016. (Doc. 9). At the request of the parties, the motion for a preliminary injunction was set for an evidentiary hearing on January 5, 2017.

Having now heard and examined the evidence presented by the parties at the time of the hearing, and having received and considered the briefs submitted by counsel, the court makes the following Findings of Fact and Conclusions of Law with respect to the motion.

Findings of Fact

1. The plaintiff, DJR Associates LLC, is an Alabama limited liability company with its principal place of business in Jefferson County, Alabama. Plaintiff operates under a franchise using the tradename "ChemStation," selling industrial cleaning supplies and chemicals to food processing facilities, such as poultry processors and commercial kitchens, as well as cleaning supplies and chemicals for truck stops. The court will refer to the plaintiff by its tradename, "ChemStation."

2. ChemStation is owned by Russell Favorite, Brett Sutton, Joe Wilbanks, and Ann Matlock. It started in Bessemer, Alabama, in 1996, with four employees. It now employs approximately forty employees in facilities in Bessemer and Mobile, Alabama; Kennesaw, Georgia; and Hammond, Louisiana. It ranks as the Number 1 franchise for sales out of about sixty ChemStation franchisees nationwide.

3. Defendant Terry Hammonds was first employed by ChemStation in June 2010, at its Jefferson County location, in customer service. Before being employed at ChemStation, Hammonds worked as an industrial chemical salesman for Zee Company for about three years, and through that employment came to know several managers and industrial chemical buyers, such as Willie Lee (originally at Sanderson Farms and, later, at Gourmet Culinary Solutions) and Andy Harris.

4. Upon being hired at ChemStation, Hammonds executed a non-compete agreement dated June 14, 2010. Paragraph 2.1 of the agreement stated:

2.1 In consideration for employment with the Company and the salary agreed to between the Company and the Employee, Employee hereby agrees that during his employment by the Company and for a period of twelve (12) months following the termination of such employment for any reason whatsoever, he will not (except on behalf of or with the prior written consent of the Company), on his own behalf or in the service or on behalf of others, (I) solicit or divert or appropriate to a Competing Business, or (II) attempt to solicit, divert or appropriate to or for any Competing Business, any person or entity whose account with the Company was assigned, solicited, sold or serviced by or under the direct sales supervision of Employee, or from whom Employee has been the principal contact, or has supervised the principal contact during his employment by the Company[.] However, nothing in this Agreement shall prohibit Employee from soliciting a customer who severed its relationship with Employer at least one year prior to the termination of Employee. A list of Employee's accounts subject to this restriction is attached as Exhibit ____. This list may be updated by amendment or alternatively, Company unilaterally may conform the list to changes in the accounts of Employee. Employee agrees that this time restriction is reasonable in light of industry considerations and the nature of the business of the Company.

Defendants' Ex. 7, Doc. 22–7. There was no customer list attached as an exhibit to the agreement.

5. In the Spring of 2012, Rusty Favorite approached Hammonds about the possibility of moving to Atlanta to take over ChemStation's sales territory north of Macon, Georgia. This was viewed as a promotion and, when Hammonds agreed to the move, he received a pay raise. As his job required him to make calls at various food processing plants, he was reimbursed for mileage expenses also.

6. As a result of the move to Atlanta, ChemStation paid for Hammonds to attend several seminars and training sessions on food safety in Chicago and to attend trade shows in Atlanta, at which Hammonds was able to meet representatives of various existing and potential customers.

7. Between June and October 2012, Hammonds was arrested for Driving Under the Influence. ChemStation chose not to terminate his employment, and, indeed, provided him with transportation during the time his driver's license was suspended.

8. Hammonds was good at his job and worked hard at it. He received exemplary evaluations. By October 2012, principals in ChemStation were discussing whether to require Hammonds to execute a new non-compete agreement. This was prompted by concerns B.J. Wilbanks (Joe Wilbanks's son) had about losing his Georgia clients to Hammonds and by Hammonds' recent DUI arrest. On October 2, 2012, Joe Wilbanks emailed other managers, saying:

I think this [a draft of a new non-compete agreement] looks good but it may be even more valuable to list specific customers such as Pilgrim's, Fieldale Farms, Wayne Farms, Proview Foods, Coleman/Kings Delight Foods, D&D Foods, Maplehurst Bakeries, Suzannah's Kitchen, Tip Top Foods, Tyson, DCS, PECO, Keystone Foods, etc. ( Brett and Rusty can add to this list...?)
He gained significant contacts with these groups after joining our company and working with Brett and Rod. I agree that Birch should help us to make sure we are in the best position possible as the result of our decision yesterday to give him a chance to remain with our group. I believe most companies would have released him as a result of his recent mistakes/problems and enforced the previously executed non-compete agreement. If there is any hesitation or delay on his part to accept this supplemental non-compete he should be dismissed immediately. I feel we are going a long way to help him during this difficult time.

Plaintiff's Ex. 90, Doc. 23–26. Joe Wilbanks' son, B.J. Wilbanks, also was a sales representative for ChemStation in the Atlanta office. On October 3, 2012, the revised non-compete agreement was delivered to Hammonds, along with a written warning placing him on 60 days' employment probation. Plaintiff's Ex. 59, Doc. 23–12, p. 7.

9. Although the parties are unable to locate an original signed version, Hammonds apparently signed a new non-compete agreement on October 8, 2012, in the Atlanta office. Hammonds does not deny that his signature appears on a copy of the agreement, but he has no memory of signing it and he expresses skepticism that he would have signed it in the presence of B.J. Wilbanks. There is no witness to the plaintiff's signature shown on the document.

10. The 2012 agreement had three key provisions: one requiring the employee to maintain the confidentiality of ChemStation's proprietary business information, the second prohibiting a former employee from recruiting or hiring away ChemStation employees, and a third limiting competition by a former employee. Paragraph 2 of the agreement states:

2. EMPLOYEE'S CONFIDENTIALITY COVENANT. The Employee hereby acknowledges that, as a necessary result of the Employee's position with the Employer and the nature of the duties assigned to the Employee as an employee of the Employer, Confidential Information shall be disclosed or otherwise made available to the Employee solely for the purpose of enabling the Employee to perform such duties. From and after the date of this Agreement, the Employee shall hold all Confidential Information in confidence and shall not:
(a) communicate or disclose Confidential Information to any party other than (1) the Employer and the Affiliates, (2) the employees of the Employer and the Affiliates who are authorized to receive such Confidential Information or (3) a party to whom such communication or disclosure has been authorized by the Employer or an Affiliate;
(b) duplicate, copy or make any record of any Confidential Information without the prior written authorization of the Employer or an Affiliate; and
(c) use any Confidential Information for the benefit of the Employee or any party other than the Employer and the Affiliates or for any purpose other than the performance of the Employee's duties as an employee of the Employer.
Immediately upon the termination of the Employee's employment with the Employer for any reason, the Employee shall return to the Employer all Confidential Information then in the Employee's possession.

Plaintiff's Ex. 1, Doc. 23–1.

11. Paragraph 3 of the 2012 agreement states:

3. EMPLOYEE'S NONSOLICITATION COVENANT. In further consideration of Employee's employment with Employer and the Confidential Information disclosed or otherwise made available to the Employee, Employee further agrees not to solicit Employer's business relationships as follows:
(a) Nonsolicitation. The Employee agrees that, during the term of Employee's employment with the Employer and for a period of two (2) years thereafter, Employee will not, directly or indirectly, either individually or as a
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