Fay v. Total Quality Logistics, LLC
| Decision Date | 01 March 2017 |
| Docket Number | Opinion No. 5471,Appellate Case No. 2014-001828 |
| Court | South Carolina Court of Appeals |
| Parties | Joshua FAY, Appellant-Respondent, v. TOTAL QUALITY LOGISTICS, LLC, Respondent-Appellant. |
Alice F. Paylor and Rene Stuhr Dukes, both of Rosen Rosen & Hagood, LLC, of Charleston, for Appellant-Respondent.
Robert Daniel Moseley, Jr. and Peter Andrew Rutledge, both of Smith Moore Leatherwood LLP, of Greenville, for Respondent-Appellant.
This cross-appeal concerns the validity of an employment agreement entered into by Appellant-Respondent Joshua Fay and Respondent-Appellant Total Quality Logistics, LLC (TQL). Fay initiated this action by seeking a declaratory judgment that the employment agreement was invalid and unenforceable. The parties filed cross summary judgment motions, and the circuit court partially granted TQL's motion finding the employment agreement was valid and enforceable. However, the circuit court denied TQL's motion as to its counterclaims for breach of the employment agreement and misappropriation of trade secrets. Fay appeals the circuit court's determination that the employment agreement was valid and argues the circuit court erred by finding Ohio law applied to the agreement and the agreement was valid and enforceable under either Ohio or South Carolina law. TQL appeals the circuit court's denial of summary judgment on its counterclaims and argues there was no genuine issue of material fact regarding Fay's breach of the agreement. We reverse the circuit court's partial grant of summary judgment to TQL, and we dismiss TQL's cross-appeal.
TQL is based in Ohio and provides motor carrier transport and related services including logistics and brokerage services. TQL offered Fay employment as a Logistics Sales Account Executive in November 2012. The offer of employment informed Fay he was "required to complete, sign, and return a TQL non-compete/non-disclosure agreement on [his] first day of employment." Fay accepted the offer of employment and began working in December 2012. Fay admitted he signed TQL's Employee Non-Compete, Confidentiality, and Non-Solicitation Agreement (the Agreement) on his first day of employment.
The nondisclosure provisions did not include a time restriction and provided it was binding "at all times" following Fay's employment with TQL. Additionally, the nondisclosure provisions provided its restrictions were "not intended and shall not be construed to prohibit [Fay] from disclosing or using the general skills and knowledge [he] acquired as an employee of TQL." Paragraph six stated that if Fay engaged in an employment relationship with a Competing Business "in a position similar" to his position with TQL it would "necessarily and inevitably result in [Fay] revealing, basing judgments and decisions upon, or otherwise using TQL's Confidential Information to unfairly compete with TQL." A "Competing Business" included "any person, firm, corporation, or entity that is engaged in the Business anywhere in the Continental United States." The Agreement defined the "Business" as "providing motor transport and related services, including third-party logistic[s] services, motor freight brokerage services and supply-chain management services."
In June 2013, TQL terminated Fay, and he founded JF Progressions, LLC (JF) through which Fay allegedly worked as the "exclusive shipping agent" for The Brandt Companies, LLC (Brandt). According to Fay, in August 2013, TQL notified him it intended to pursue legal action if he failed to "cease working as a broker" for Brandt through JF. As a result, Fay acted proactively and filed this action against TQL in November 2013, seeking a declaratory judgment that the Agreement was invalid and unenforceable. The complaint asserted the Agreement lacked a geographical limitation and, if enforced, would prevent Fay "from working in the truck shipping industry in any capacity in the entire United States." The complaint generally alleged the Agreement was "overly broad and not necessary for the reasonable protection" of TQL.
In its answer, TQL asserted counterclaims alleging Fay misappropriated trade secrets and breached the Agreement, which it claimed was valid and enforceable. TQL also sought injunctive relief. In December 2013, Fay filed a motion for judgment on the pleadings or, alternatively, summary judgment. Fay asserted the Agreement was invalid and unenforceable and, as a result, he was entitled to summary judgment on his declaratory judgment action and TQL's counterclaims for breach of contract and misappropriation of trade secrets. In January 2014, TQL filed a motion for summary judgment and argued the Agreement was reasonable and enforceable.
TQL offered several affidavits from one of its managers, Hillary Kotlarz. Kotlarz's third affidavit attempted to define the contours of the Agreement. Kotlarz asserted the Agreement did not prevent Fay from working in all capacities in the transportation industry. Kotlarz contended the nondisclosure provision does not prohibit Fay from utilizing all information he learned while working for TQL. The affidavit listed several positions Fay could have held in the transportation industry and many examples of nonconfidential information he learned while working for TQL.
During the circuit court's hearing, Fay argued the court must invalidate the Agreement if it was contrary to South Carolina public policy even if Ohio law applied. He asserted the Agreement violated public policy because it was "overbroad when considering TQL's interest." Fay contended the nondisclosure provisions were in effect noncompete provisions because the Agreement defined "confidential information as every piece of information given to the employee." Because the nondisclosure provision was actually a noncompete provision, according to Fay, it had to comport with the public policy of South Carolina regarding noncompete agreements.
In April 2014, the circuit court found the Agreement was valid under Ohio law and did not offend the public policy of South Carolina. Applying Ohio law, the circuit court explained the Agreement's restrictions were no greater than required for TQL's protection, did not impose undue hardship on Fay, and were not injurious to the public. Thus, the circuit court granted TQL's motion for summary judgment to the extent it sought a finding the Agreement was valid and enforceable. In response to a Rule 59(e), SCRCP motion filed by Fay, the circuit court clarified that it did not find Fay breached the Agreement and denied TQL's motion for summary judgment with regard to breach of the Agreement and misappropriation of trade secrets. This cross-appeal followed.
The circuit court should grant a motion for summary judgment when the evidence shows "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Rule 56(c), SCRCP. An appellate court "reviews the grant of a summary judgment motion under the same standard as the [circuit] court." Montgomery v. CSX Transp., Inc. , 376 S.C. 37, 47, 656 S.E.2d 20, 25 (2008). "When determining if any triable issues of fact exist, the evidence and all inferences which can be reasonably drawn from the evidence must be viewed in the light most favorable to the non-moving party." Id. To defeat a motion for summary judgment, a plaintiff must show "a genuine issue of material fact exists for each essential element of the plaintiff's claim." Hansson v. Scalise Builders of S.C. , 374 S.C. 352, 358, 650 S.E.2d 68, 71 (2007).
Fay argues the circuit court erred by finding the Agreement was valid and enforceable because it violated the public policy of South Carolina. Fay argues the nondisclosure provisions located in paragraphs four, six, and seven were essentially noncompete provisions because they restricted competition, rather than protected confidential information. Fay asserts the circuit court should have held the nondisclosure provisions to the same standard as the noncompete provisions, which included requiring a reasonable time restriction. According to Fay, because the nondisclosure provisions failed to include a reasonable...
To continue reading
Request your trial
-
Synthes United States, LLC v. Davis
...rewritten by a court or limited by the parties' agreement, but must stand or fall on their own terms."); Fay v. Total Quality Logistics, LLC, 799 S.E.2d 318, 323 (S.C. Ct. App. 2017) ("[W]e may assess the validity of a noncompete agreement under the law of another state, but we must also as......
-
Belimed, Inc. v. Bleecker
...disclosing information regarding the contents of the screenshot. [9] Contrary to Bleecker's suggestion, the South Carolina Court of Appeals in Fay had occasion to weigh in on the inevitable disclosure doctrine because the court was analyzing the validity of a non-disclosure provision, which......
-
S.C. Lottery Comm'n v. Glassmeyer
...be treated as one for summary judgment and disposed of as provided in Rule 56[, SCRCP] ...."); Fay v. Total Quality Logistics, LLC , 419 S.C. 622, 628, 799 S.E.2d 318, 322 (Ct. App. 2017) ("The circuit court should grant a motion for summary judgment when the evidence shows ‘there is no gen......