Heartland Payment Sys., LLC v. Stockwell

• Decision Date: 05 March 2020
• Docket Number: Case No. 1:19-CV-05327-SDG
• Citation: 446 F.Supp.3d 1275
• Parties: HEARTLAND PAYMENT SYSTEMS, LLC, Plaintiff, v. Phillip Kord STOCKWELL, Defendant.
• Court: U.S. District Court — Northern District of Georgia

446 F.Supp.3d 1275

HEARTLAND PAYMENT SYSTEMS, LLC, Plaintiff,

v.Phillip Kord STOCKWELL, Defendant.

Case No. 1:19-CV-05327-SDG

United States District Court, N.D. Georgia, Atlanta Division.

Signed March 5, 2020

Michael David Kabat, Nathan David Chapman, Abigail Stecker Romero, Kabat Chapman & Ozmer, LLP, Atlanta, GA, for Plaintiff.

Amanda S. Thompson, Salter Thompson Law, P.C., Atlanta, GA, Ryan S. Wilson, Hartzog Conger Cason & Neville, Oklahoma City, OK, for Defendant.

PERMANENT INJUNCTION AND FINAL JUDGMENT

STEVEN D. GRIMBERG, United States District Court Judge

This matter comes before the Court upon Plaintiff Heartland Payment Systems, LLC's ("HPS") and Defendant Phillip Kord Stockwell ("Stockwell," and collectively with HPS, the "Parties") Joint Motion for Entry of Permanent Injunction and Final Judgment ("Motion"). (D.E. 29.) The Court hereby GRANTS the Motion and enters the following Permanent Injunction and Final Judgment.

I. PROCEDURAL HISTORY

On October 21, 2019, HPS filed a complaint against Stockwell in the Superior Court of Fulton County, State of Georgia, Case No. 2019CV328268 ("Complaint"). (D.E. 1-1.) In the Complaint, HPS brought claims against Stockwell for: (1) breach of contract arising from the employment agreement; (2) breach of contract arising from a related stock award; (3) injunctive relief; and (4) attorneys' fees. (Id. ) HPS effected service of process of the Complaint and the Fulton County Superior Court summons on Stockwell at his home in Edmond, Oklahoma on October 24, 2019. (D.E. 1-2.)

On October 29, 2019, HPS filed an Emergency Motion for Temporary Restraining Order and Interlocutory Injunctive Relief and Expedited Discovery (the "Emergency Motion") in the Superior Court of Fulton County, Georgia, which set a hearing on the Motion for November 27, 2019. (D.E. 1-3–D.E. 1-8; D.E. 1-10.)

On November 22, 2019, Stockwell removed this action from the Fulton County Superior Court to this Court pursuant to 28 U.S.C. § 1332(a). (D.E. 1.) On November 29, 2019, Stockwell answered the Complaint and filed a Response in Opposition to the Motion. (D.E. 5, D.E. 6.)

On December 2, 2019, the Court held a hearing on and granted HPS' Emergency Motion. (D.E. 9.) After HPS posted a $50,000 bond, the Court entered a preliminary injunction in HPS' favor (the "Preliminary Injunction Order"). (D.E. 11, D.E. 12.) The Parties subsequently filed the instant Motion, requesting the Court convert the Preliminary Injunction Order into a permanent injunction and final judgment. (D.E. 29.)

II. FINDINGS OF UNDISPUTED FACTS

A. The Parties and the Payment-Processing Industry

HPS is a Georgia-based provider of payment-processing technology services and products throughout the United States, including, as pertinent to the Motion, in Oklahoma and Texas.¹ (D.E. 2-2 – Affidavit of T.J. Kerr ("Kerr Aff.") ¶ 3.) HPS provides merchants with electronic credit-and debit-processing services, and leases and/or sells point-of-sale terminals and processing-related products to effectuate those services. (Id. ¶ 4.) The payment-processing industry is extremely competitive, with competitors fighting to secure contracts from the exact same clients. (Id. ¶ 5.) HPS has established that it values and takes pains to protect its relationships with its employees, its relationships and goodwill with its clients, and its confidential, proprietary, and sensitive business information, such as its pricing models, market analyses, client lists, client activity records, sales strategies, employee commission plans, and related records and information vital to its operations ("Confidential Information"). (Id. ¶ 6.) HPS requires its employees with knowledge of or access to its Confidential Information to enter into restrictive covenants (such as non-compete and non-solicitation agreements) as a condition of their employment. (Id. ¶ 7.)

B. Stockwell's Employment with HPS and the Parties' Sales Manager Agreement.

Stockwell is a citizen of Oklahoma (D.E. 1-1 ¶ 7; D.E. 5 ¶ 7.) HPS hired Stockwell as a Division Manager of Sales on March 5, 2018. (Kerr Aff. ¶ 8.) On January 7, 2019, HPS promoted Stockwell to the position of Vice President of Sales and increased his salary to well over six figures. (Id. ¶ 9.) In both positions—but particularly as a high-ranking Vice President—Stockwell was a business leader who, among other duties, built a team of 50 to 75 HPS employees, who he managed and supervised (and thus hired and fired), and who, in turn, solicited clients and prospective clients in, inter alia , Oklahoma and Texas for the purpose of selling HPS' products and services. (Id. ¶¶ 10, 29.) To satisfy the aforementioned sales and management requirements of his position, Stockwell had access to and knowledge of HPS' Confidential Information, including (but not limited to) the details of HPS' relationships and interactions with clients and prospective clients, the terms of their contracts and volume of their business, HPS' pricing models, sales and marketing analyses, business and strategic plans, product development, employee retention strategies, and employee commission structures. (Id. ¶ 12.)

To protect HPS' Confidential Information, and as a condition of his employment, Stockwell and HPS entered into a Sales Manager Employee Agreement (the "Agreement") that contained various restrictive covenants designed to protect HPS' legitimate business interests. (See id. ¶ 13, Ex. 1 ("Agmt.") at 1 (stating HPS desired to employ Stockwell to "manage and supervise its employees who customarily and regularly solicit customers and prospective customers for the purpose of selling HPS' products and services" and Stockwell's desire to "accept such employment").)

The Agreement included a non-competition covenant prohibiting Stockwell from working for a competitor in the same geographic area for 12 months post-termination:

During the term of Employee's employment and for a period of twelve (12) months immediately following the termination of Employee's employment for any reason, Employee shall not ... obtain any employment ... with a Competitor ... in the geographic area in which the Company conducts business , in which Employee has duties for (or provides services to) such Competitor that relate to Competitive Services and are the same or similar to those services actually performed by Employee for the Company ...

(Agmt. ¶ 11 (emphasis added).) The Agreement defined a "Competitor" as any "entity or enterprise which is planning to engage, preparing to engage, or is engaged, wholly or in part, in Competitive Services." (Agmt. ¶ 11(b).) The Agreement in turn defined "Competitive Services" as "services competitive with the business activities engaged in by the Company as of the date of termination of Employee's employment ... which include, but are not limited to ... the provision of products and services to facilitate or assist with the movement in electronic commerce of payment and financial information, [and] merchant processing[.]" (Agmt. ¶ 11(a).)

The Agreement also contained a non-solicitation of employees covenant prohibiting Stockwell from soliciting, recruiting, enticing, inducing, or hiring HPS' employees for 24 months following his termination:

During the period of Employee's employment by HPS and for a period of twenty-four (24) months after termination for any reason, Employee will not directly or indirectly solicit , recruit, entice, induce, or hire any employee of HPS to work for a third party other than HPS or engage in any activity that would cause any HPS employee to terminate his or her employment with HPS or violate any agreement he or she may have with HPS.

(Agmt. ¶ 10 (emphasis added).)

The Agreement also required Stockwell to "notify HPS in writing of each subsequent employer during the course of the restricted time periods ... including the name of the employer, the address of the employer and the job title and duties being performed by Employee for the subsequent employer." (Agmt. ¶ 12.)

Stockwell also acknowledged and agreed that, "due to the nature of HPS' business," the aforementioned restrictive covenants:

(a) [were] essential for the reasonable, proper, and adequate protection of HPS's business, its goodwill and its trade secrets, proprietary data and confidential information , irrespective of whether such goodwill and assets may be protectable in the jurisdiction of Employee's country or state of domicile; (b) [were] reasonable with respect to length of time, scope and geographic area ; and (c) [would] not prohibit Employee from engaging in other businesses or employment for the purpose of earning a livelihood following the termination of his/her relationship with HPS.

(Agmt. ¶ 12 (emphasis added).) Stockwell further acknowledged and agreed that his "breach of [the restrictive covenants] of this Agreement will cause immediate, irreparable and continuing damage to HPS for which there is no adequate remedy at law " and that in the event of breach or violation of the covenants, HPS would be "entitled to temporary, preliminary and permanent injunctive relief and restraints enjoining and restraining such breach or violation or threatened breach or violation[.]" (Agmt. ¶ 13 (emphasis added).)

Stockwell agreed to nearly identical non-competition and employee non-solicitation covenants when he accepted a Restricted Stock Award Certificate and the accompanying terms and conditions of issuance. (Kerr Aff. ¶ 21, Ex. 2 ("Stock Award").)

On July 1, 2019, HPS terminated Stockwell's employment. (Id. ¶ 22.) At that time, HPS sent Stockwell a letter reminding him of the non-compete and non-solicitation covenants (among others) in the Agreement. (Id. ¶ 23, Ex. 3.)

C. Stockwell's New Employment with Clearent and Hiring of Brian Werkman

Shortly after Stockwell's employment with HPS ended, he secured a position with Clearent, another credit card processing company that is one of HPS' direct competitors in the payment processing industry. (Kerr Aff. ¶¶ 24–25; D.E. 6-1 – Declaration of...