Harvey Barnett, Inc. v. Shidler

• Decision Date: 16 April 2001
• Docket Number: No. CIV. A. 00-B-731.,CIV. A. 00-B-731.
• Citation: 143 F.Supp.2d 1247
• Parties: HARVEY BARNETT, INC., a Florida corporation, and Infant Swimming Research, Inc., a Florida corporation, Plaintiffs, v. Ann SHIDLER, individually and d/b/a Infant Aquatic Survival, and Judy Heumann, individually and d/b/a Infant Aquatic Survival, and Allison Geerdes, individually and d/b/a Infant Aquatic Survival, Defendants.
• Court: U.S. District Court — District of Colorado

143 F.Supp.2d 1247

HARVEY BARNETT, INC., a Florida corporation, and Infant Swimming Research, Inc., a Florida corporation, Plaintiffs, v. Ann SHIDLER, individually and d/b/a Infant Aquatic Survival, and Judy Heumann, individually and d/b/a Infant Aquatic Survival, and Allison Geerdes, individually and d/b/a Infant Aquatic Survival, Defendants.

No. CIV. A. 00-B-731.

United States District Court, D. Colorado.

April 16, 2001.

Peter A. Jaffe, Douglas Jaffe, McCoy, CO, for Plaintiffs.

Michael J. Shidler, Michael J. Shidler & Associates, Denver, CO, Franklin Christopher Chrisbens, Kristin M. Berdan, Chrisman, Bynum & Johnson, P.C., Boulder, CO, for Defendants.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

BABCOCK, Chief Judge.

Plaintiffs, Harvey Barnett, Inc. and Infant Swimming Research (collectively "ISR") bring claims for breach of contract, misappropriation of trade secrets, unjust enrichment, trademark infringement, Lanham Act violations, unfair competition and deceptive trade practices, and exemplary damages. Defendants, Ann Shidler, Judy Heumann, Allison Geerdes, and Infant Aquatic Survival (collectively "Defendants") counter-claim for breach of contract, unjust enrichment, breach of fiduciary duty, tortious interference with contract and prospective economic advantage, and breach of covenant of good faith and fair dealing. ISR moves for a preliminary injunction under Rule 65. It requests that I enjoin Defendants from training other instructors in the ISR methods. The motion has been briefed and an evidentiary hearing held. Following the presentation of ISR's case-in-chief, I granted Defendants' Fed.R.Civ.P. 50 motion for judgment as a matter of law as to Allison Geerdes. For the reasons set forth below, I deny ISR's motion for a preliminary injunction as to Ann Shidler and Judy Heumann.

I. Findings of Fact

Harvey Barnett is the founder and President of ISR. He holds a Ph.D. in psychology, and developed a program to teach infants and toddlers to survive in water. Children are taught, through a series of "Prompts and Procedures," to float on their backs to breathe, and then to flip over and swim toward a wall or other safe area. While swimming, the children are taught to intermittently flip over and float on their backs to rest and breathe. Upon reaching the wall or shore they are taught to pull themselves up out of the water or hang on to the side of the wall with their faces out of the water until help arrives. Other variations of this skill are taught by swimming schools around the world and throughout the United States. Children are essentially taught to swim, flip over and float, then flip over and swim again. Thus, the method is called "swim, float, swim."

As demand for Dr. Barnett's program grew, he trained other adults to become ISR swim instructors. Eventually some of these instructors became "master instructors," who in turn taught other instructors. In this way, ISR became a national program. Instructors across the country became independent contractors, using the Infant Swimming Research name and methods. ISR is paid a fee for each instructor trained, as well as a fee for each student taught. ISR also held annual recertification symposiums for its instructors.

ISR provides program materials both to instructors and to parents who enroll their children in ISR. Instructors receive training, including a manual with material from other researchers and Dr. Barnett's research and methodology. Instructors also receive a videotape of "Prompts and Procedures." This tape shows instructors how to use behavioral conditioning to train children to respond in certain ways. For example, the video teaches the instructor to tap the child's fingers when he or she successfully latches onto the wall, thereby reinforcing the desired behavior. Both the manual and the video covers cues that a child might be in physical distress and appropriate responses to that distress, as well as other water safety issues. ISR eventually created the Instructor Development Handbook to facilitate the training of new instructors. Parents are given the Parent Resource Manual, which explains the methods used in the classes, recommended diet and sleep for children in the program, and the parent's role in lessons. Parents and observers are allowed to watch and videotape the lessons.

Defendants Judy Heumann and Ann Shidler trained as ISR instructors. Prior to becoming an ISR instructor, Ms. Heumann taught swimming lessons through other programs, including variations on the swim, float, swim method. Between 1972 and 1984 she developed her own methods of teaching swim, float, swim. She was trained by ISR in 1984, using commercially available texts. She was certified as a master instructor in 1987. At that time she received the 1986 version of Dr. Barnett's The Science of Infant Swimming, provided to her as a computer printout with no binding. Ms. Heumann trained four other instructors between 1987 and 1992, and each time used the 1986 The Science of Infant Swimming. Although a new version of The Science of Infant Swimming was produced in 1994, Ms. Heumann never received a copy. Since leaving ISR Ms. Heumann has continued to teach swimming to infants and young children, although her program contains significant variations from the ISR program. She has received some training from other swim schools and professional organizations which teach the swim, float, swim method. She has not, however, trained any additional instructors. Ms. Heumann never received the Instructor Development Handbook.

Ms. Shidler is a registered nurse, and was an R.N. prior to becoming an ISR instructor. She was trained by ISR in 1990, and received a Parent Resource Manual and the 1986 The Science of Infant Swimming. She was certified as a master instructor in 1993. Ms. Shidler taught two instructors, one in 1994 and one in 1999. By 1999 she had received the 1998 Prompts and Procedures video and the 1994 The Science of Infant Swimming. Ms. Shidler never received the ISR Instructor Development Handbook.

While affiliated with ISR, both Ms. Heumann and Ms. Shidler signed a "Non-disclosure and Confidentiality Agreement" and a "License Agreement." The Non-Disclosure Agreement states in pertinent part that the "Licensee" has received confidential information from Dr. Barnett and ISR. Dr. Barnett and ISR agree to furnish further confidential information on the condition that "Licensee agrees to hold said further confidential information in trust and confidence and agrees that it shall be used only for the contemplated purposes as set forth in said license agreement and this agreement, and shall not be used for any other purpose, or disclosed to any third party." See, e.g., Exhibit 7.

The License Agreement contains two pertinent sections. The first, entitled "Confidentiality of Information," requires that the Licensee not train instructors or assistants without the permission of ISR. It provides liquidated damages of $50,000 for each breach of the agreement. See, e.g., Exhibit 11. The License Agreement then sets out in a section entitled "Covenant Not to Compete" that the Licensee not teach infants or children to swim, or train others to teach infants and young children to swim, within 500 miles of the Licensee's current business address. The covenant not to compete lasts for two years from the termination of the Agreement, and applies to both self-employment and employment for other organizations. See id. No other provisions refer to the training of instructors.

Ms. Shidler and Ms. Heumann eventually separated from ISR. The three Defendants formed Infant Aquatic Survival, a company which teaches infant and child swimming in Colorado. They teach a swim, float, swim method, although they have significantly deviated from ISR methods.

ISR asserts that its program is a trade secret, both because of unique methods and because it teaches children survival skills in ten minutes a day for three to four weeks. ISR admits, however, that its program was not a trade secret before 1996. It argues that in 1996 the program became fully developed and acquired trade secret status. At the beginning of the evidentiary hearing, ISR stipulated that the only issue on its application for injunctive relief is whether the use of Prompts and Procedures in training instructors and the application of behavioral science to teaching instructors is subject to the Non-Disclosure and Confidentiality Agreement. Although the Agreements include a Florida choice of law provision, the parties have stipulated that Colorado law is virtually identical and should apply.

II. Motion for a Preliminary Injunction

The purpose of a preliminary injunction under Fed.R.Civ.P. 65 is to preserve the status quo between the parties pending a final determination on the merits. See University of Texas v. Camenisch, 451 U.S. 390, 101 S.Ct. 1830, 68 L.Ed.2d 175 (1981). A preliminary injunction is an equitable remedy that invokes the sound discretion of the district court. See Lundgrin v. Claytor, 619 F.2d 61, 63 (10th Cir.1980). The burden is on the movant to make a prima facie showing of a probable right to the ultimate relief and a probable danger of injury if the motion is denied. See id. A preliminary injunction may issue if the movant clearly shows: (1) a substantial likelihood of success on the merits; (2) irreparable injury if the injunction is not granted; (3) that injury outweighs any harm the preliminary injunction will cause the opposing party; and (4) the preliminary injunction is in the public interest. See SCFC ILC, Inc. v. Visa USA, Inc., 936 F.2d 1096, 1098 (10th Cir. 1991). The nature of the injunction may further increase the movants' burden. Certain types of preliminary injunctions give rise to a heightened burden. See id. at 1090-99. However, none of these apply to ISR.

The Tenth Circuit has adopted a modified "likelihood of success" requirement. If the movant has satisfied the other preliminary injunction...