GlobalTranz Enters. Inc. v. Murphy
| Decision Date | 26 March 2021 |
| Docket Number | No. CV-18-04819-PHX-ROS,CV-18-04819-PHX-ROS |
| Parties | GlobalTranz Enterprises Incorporated, Plaintiff, v. Sean Michael Murphy, et al., Defendants. |
| Court | U.S. District Court — District of Arizona |
Pending before the Court are two motions for summary judgment, one from Plaintiff GlobalTranz Enterprises ("GTZ") and one from Defendant Sean Michael Murphy ("Murphy"). Murphy is a former employee of GTZ. GTZ alleges when Murphy left GTZ, he stole one of GTZ's clients, confidential information, and trade secrets. As a result, GTZ sued Murphy for breach of contract, breach of fiduciary duty, misappropriation of trade secrets under federal and Arizona law, tortious interference, conversion, breach of duty of good faith and fair dealing, unjust enrichment, and civil conspiracy. Murphy has counterclaimed overtime wage violations under federal and Arizona law. Both GTZ and Murphy seek summary judgment on GTZ's breach of contract, breach of fiduciary duty, Arizona trade secrets claim, and Murphy's FLSA claim. Only Murphy seeks summary judgment on GTZ's federal trade secrets claim and the remaining tort claims. No one seeks summary judgment on the Arizona wage and overtime claim. As will be discussed below, GTZ's motion for summary judgment will be denied and Murphy's motion for summary judgment will be granted in part and denied in part.
The most basic of background facts are heavily disputed. The Court will provide an overview without resolving the disputes.
GTZ is a freight broker and third-party logistics company specializing in freight management services.1 (Docs. 1-3 at 24; 126 at 2). According to GTZ's website, it "provides shippers of all sizes with fast and reliable transportation services across all major modes of freight." About GlobalTranz, https://www.globaltranz.com/company/ (last visited March 23, 2021). Broadly speaking, GTZ is a broker that connects shippers (e.g., retailers) with carriers or freight providers (e.g., truck companies).
On February 19, 2014, Murphy signed an employment offer from GTZ. (Doc. 126 at 2). The employment offer required Murphy to sign GTZ's "standard non-compete agreement . . . prior to or on [his] start date." (Doc. 126 at 2). He began work as a Junior Carrier Relations Representative on March 3, 2014. (Doc. 126-1).
According to GTZ, Murphy electronically agreed to GTZ's "Employee Proprietary Information, Inventions, and Non-Solicitation Agreement" (hereafter "Restrictive Covenants Agreement") on his first day at work. That agreement contains nondisclosure and anti-piracy restrictive covenants. (Doc. 126-5). Murphy claims to have no memory of entering into the agreement.
In early 2015, Murphy began working as a Logistics Specialist and was promoted to a Senior Logistics Specialist in January or February 2017.2 (Docs. 126 at 4; 139 at 2). In both roles, Murphy secured new business for GTZ and managed existing customeraccounts. (Doc. 126 at 3).
One of those accounts was KIK International ("KIK"). (Doc. 126 at 4). According to Murphy, he first learned of KIK "on the back of a box at Home Depot" in 2015. (Doc. 126-18 at 37). He then called KIK and asked about their shipping needs. (Doc. 126-18 at 37). Murphy secured KIK as a client for GTZ. (Doc. 126-18 at 38). In 2015, KIK generated for GTZ about $229,087.47 in revenue and $53,543.71 in profits.3 (Docs. 126 at 5, 115 at 6). In 2016, KIK generated GTZ about $522,237.29 in revenue and $93,084.25 in profit. (Docs. 126 at 5; 116 at 9). In 2017, KIK generated GTZ about $2,194,953.62 in revenue and $297,989.38 in profit. (Docs. 126 at 5; 119 at 10).
In the four months before Murphy resigned on February 5, 2018, GTZ claims Murphy "systemically prepared to take KIK from GTZ." (Doc. 126 at 3, 5). On October 27, 2017, Murphy emailed to his personal email two GTZ spreadsheets containing KIK information. (Doc. 126 at 5-6).4 Those spreadsheets included GTZ data on prior shipments and historical averages among other data used to formulate a bid. (See, e.g., Doc. 120). On November 17, 2017, Murphy emailed to his personal email a PDF used to compile data and analyze potential rates to submit to a customer as a bid. (Doc. 126 at 6). This document contained 30 pages of KIK shipment information. On January 25, 2018, Murphy emailed to his personal email correspondence between Murphy and other GTZ employees regarding the KIK bid process, strategies, and bid prices. (Doc. 126 at 6). That correspondence included a discussion about a specific bid and how GTZ might handle competitors' bids for KIK. (Doc. 113-1). Minutes later, he sent an email to his personal email containing an exchange between Murphy and a manager at GTZ regarding KIK's shipping volume in California and its strategic importance to GTZ. (Doc. 126 at 6). Minutes after that, he emailed to his personal account a document that identified the costs and methods of charging that KIK preferred. (Doc. 126 at 6).
Later on the afternoon of January 25, Murphy sent a LinkedIn message to Armstrong Transport Group LLC ("Armstrong"), a GTZ competitor, inquiring about becoming an agent for Armstrong. (Doc. 126 at 7). Lauren Russell, a recruiter at Armstrong, responded on January 31, 2018 explaining Armstrong's outside agent-based model. (Doc. 126 at 7). Russell explained, Armstrong wanted to "give agents another option besides GTZ." (Doc. 126 at 7). Russell then offered and provided a live demonstration of Armstrong's shipping software. (Doc. 126 at 7). On February 1, 2018, Murphy provided Russell with what he claimed were his finalized 2017 financial performance figures (e.g., revenue, margin, number of shipments). (Docs. 126 at 7; 114-3 at 5). Russell then asked Murphy, "Do you want me to vet any of your large customers (top 10) to see if there is any customer clearance issues," meaning was another agent at Armstrong already working with Murphy's large clients? (Docs. 114-3 at 4; 126-28 at 6). Murphy replied with twelve GTZ customers for whom Murphy provided account management services. (Doc. 126 at 7). The parties dispute whether Russell knew Murphy worked for GTZ and that the customers were GTZ's rather than Murphy's. (Docs. 126 at 7; 139 at 5). The parties also dispute whether Murphy attempted to hide these facts from Russell. (Docs. 126 at 7; 139 at 5).
On February 5, 2018, Murphy resigned from GTZ (Doc. 126 at 7). The next day, GTZ sent a certified letter advising Murphy of his continuing obligations to GTZ as set forth in the Restrictive Covenants Agreement. (Doc. 126 at 8). On January 18, 2018, prior to resigning from GTZ, Murphy formed his own company, DirectPoint Logistics, LLC. (Doc. 1-3 at 28). It appears Murphy used DirectPoint as an intermediary to become an "Independent Contractor Freight Agent" for Armstrong on February 23, 2018. (Docs. 126 at 8, 139-2 at 10). Within days of signing with Armstrong, Murphy submitted a request for Armstrong to grant KIK a line of credit. (Doc. 126 at 8). On March 29, 2018, KIK's credit application was approved by Armstrong. (Doc. 126 at 8). Murphy, presumably through his company DirectPoint, then provided KIK services from April or May of 2018 until November or December of 2018. (Doc. 126 at 8).
On November 16, 2018, GTZ filed this action in Maricopa County Superior Court against Murphy, his wife (listed as "Jane Doe Murphy"), DirectPoint, and Armstrong.5 (Doc. 1-3 at 22). The complaint alleges ten counts. Against Murphy, GTZ alleges breach of contract, breach of fiduciary duty, and breach of the duty of good faith and fair dealing. Against Armstrong and DirectPoint, GTZ alleges aiding and abetting a breach of fiduciary duty. Against all defendants, GTZ alleges misappropriation of trade secrets in violation of the federal Defend Trade Secrets Act and the Arizona Uniform Trade Secrets Act, tortious interference with contracts/business expectancies, conversion, unjust enrichment, and civil conspiracy. (Doc. 1-3 at 34-45).
Murphy asserted counterclaims for a violation of the federal Fair Labor Standards Act ("FLSA") and Arizona state law for unpaid wages and overtime. (Doc. 130 at 15-16). On December 19, 2018, Armstrong removed this action to federal court under federal question jurisdiction and supplemental jurisdiction. (Doc. 1). On November 12, 2019, GTZ and Armstrong stipulated to dismiss Armstrong and it was granted. (Docs. 55, 56).
GTZ and Murphy now bring motions for summary judgment.6 Both GTZ and Murphy seek summary judgment on GTZ's breach of contract, breach of fiduciary duty, Arizona trade secrets claim, and Murphy's FLSA claim. Only Murphy seeks summary judgment on GTZ's federal trade secrets claim and the remaining tort claims. No one seeks summary judgment on the Arizona wage and overtime claim.
"[W]hen simultaneous cross-motions for summary judgment on the same claim are before the court, the court must consider the appropriate evidentiary material identified and submitted in support of both motions, and in opposition to both motions, before ruling on each of them." Fair Hous. Council of Riverside Cty., Inc. v. Riverside Two, 249 F.3d 1132,1134 (9th Cir. 2001). The moving party is entitled to summary judgment if the evidence, viewed in the light most favorable to the non-moving party, shows "there is no genuine dispute as to any material fact" and the moving party "is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a); see also Ellison v. Robertson, 357 F.3d 1072, 1075 (9th Cir. 2004); Margolis v. Ryan, 140 F.3d 850, 852 (9th Cir. 1998). At summary judgment, the court cannot weigh the evidence nor make credibility determinations. Dominguez-Curry v. Nevada Transp. Dep't, 424 F.3d 1027, 1035 (9th Cir. 2005). However, "[i]f a party fails to properly support an assertion of fact or fails to properly address another party's assertion of fact . . . , the court may . . . consider the fact undisputed." Fed. R. Civ. P. 56(e)(2). The moving party initially bears the burden of proving the absence of a genuine dispute...
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