Jennings-Dill, Inc. v. Israel
| Docket Number | 6046,Appellate Case 2021-001137 |
| Decision Date | 24 January 2024 |
| Parties | Jennings-Dill, Inc., Respondent, v. Eric Israel, Appellant. |
| Court | South Carolina Court of Appeals |
Heard December 6, 2023
Appeal from Greenville County Alex Kinlaw, Jr., Circuit Court Judge
Matthew R. Ozment, of Grove Ozment, LLC, of Greenville, for Appellant.
Phillip Arthur Kilgore, of Greenville, Christopher Ray Thomas, of Columbia, both of Ogletree Deakins Nash Smoak & Stewart, PC, and Sara Elizabeth Olschewske, of Simpsonville, all for Respondent.
Appellant Eric Israel appeals the circuit court's issuance of a preliminary injunction that enjoins Israel from using documents to which he had access during his prior employment with Respondent Jennings-Dill, Inc. (JDI). The injunction explicitly prohibits Israel from using the information in the documents to bid on any project on behalf of his current employer, Place Services, Inc. (PSI), or to solicit JDI employees. JDI alleged the documents contained confidential information and trade secrets. Israel argues the circuit court erred in finding JDI demonstrated a likelihood of success on the merits because (1) no evidence was presented to show that Israel possessed or misappropriated a trade secret or confidential information, and (2) the circuit court relied exclusively on hearsay and speculative statements to find Israel had solicited JDI employees. Israel also argues the circuit court erred by improperly "balancing the equities" between the parties to support granting the preliminary injunction. We affirm.
JDI is a full-service commercial plumbing and gas piping company. JDI's Plumbing Division accounts for twenty to thirty percent of JDI's annual revenue. Israel worked for JDI for approximately eleven years as an at-will employee with no restrictive covenants. Israel began his tenure as a plumber and was eventually promoted to plumbing superintendent, a supervisory position over foremen and plumbers. In the superintendent position, Israel was issued a company iPad on which he had access to what JDI deemed to be confidential information related to employee payroll and retention as well as JDI's bidding process.[1] Employees who were issued an iPad received and were subject to JDI's "iPads or Electronic Devices Usage Policy." The policy provided that employees with company-issued iPads were forbidden from copying sensitive data and were responsible for recognizing the need to protect confidential data.
On June 13, 2021, Israel sent an email to JDI's management informing them of his intent to resign on July 8 2021.[2] On June 24, 2021, Israel discussed his resignation with Andy Locklair, JDI's Vice President of Operations, in a phone call. There is some dispute about what occurred during this phone call. Locklair stated that during the call, Israel reiterated his intention to resign and attempted to give his two-week notice. Locklair testified he told Israel there was no need to work out the remaining two weeks and that Israel needed to return all his company-issued property-including his keys, iPad, truck, and tools-the following morning. According to Israel, he and Locklair had discussed his intention to resign on the phone, but it was not until the following morning on June 25 that Locklair informed Israel via email that he was no longer an JDI employee and that he did not need to work the rest of his notice period. Israel provided a copy of this email in which Locklair stated,
Israel testified that on the same night as the phone call with Locklair, one of his subordinates-Anthony Driggers-called Israel and asked about a raise he had been promised. Israel testified that while speaking with Driggers, he opened several files in ShareFile on his company-issued iPad to check Driggers's current pay rate. According to Israel, he attempted to open a file but it failed to open due to the file size. He then attempted to open the file once more. Finally, he tried to open a different file to check Driggers's pay rate. Israel testified he was unable to locate the pay rate in any file he viewed.
A report from ShareFile indicated Israel downloaded three files to his company-issued iPad that evening. The three files were titled: "Personnel Report," "Personnel Report Jan 2021 - Dec 2021," and "JD Employee List" (collectively, Personnel Documents). According to JDI, these files were, respectively, the monthly employee headcounts through July 2021; personnel changes (including new hires and terminations); and the personal contact information and pay rates for all JDI employees, not just those in the Plumbing Division. Israel returned the company-issued iPad on June 25. According to JDI, within three weeks of Israel's resignation, the Plumbing Division lost twelve employees, reducing its workforce down to only seventeen employees.
In July, Israel began working for PSI-a company that engages in mechanical contracting, including plumbing services. Israel was not the first JDI employee to leave JDI's employ and start to work for PSI. A former JDI plumbing superintendent, Phillip Dobbins,[3] was already employed by PSI at the time Israel resigned.
On July 13, 2021, Dobbins sent an email to Israel's JDI email address in which Dobbins informed Israel that Tony Smith, a PSI employee whom JDI alleged it previously employed, needed to complete a PSI-required training. It was at that moment, according to Locklair, JDI "was able to connect Israel's actions [in] download[ing] its documents with what appeared to be a clear scheme to solicit and recruit [JDI] employees by having Israel use the unlawfully obtained information to raid [JDI's] [P]lumbing [D]epartment." Locklair testified that most of the employees that left following Israel's departure were long-term and never indicated any displeasure with their jobs. According to Locklair, four employees informed JDI management that Israel had entered JDI jobsites with "no legitimate business purpose" and had solicited JDI employees to work for PSI. Locklair testified that two of the employees who reported Israel's presence on jobsites and solicitation have since resigned.[4] Locklair also stated he believed Israel contacted or attempted to contact at least four other employees.
JDI sought the preliminary injunction to prevent Israel from using or disclosing the confidential information and trade secrets contained within the Personnel Documents and from improperly soliciting JDI employees. The claims on which JDI sought injunctive relief were: (1) misappropriation of trade secrets, (2) unfair trade practices, (3) conversion, and (4) unjust enrichment/quantum meruit.[5]JDI stated it considers the compilation of its employees' names, their contact information, and their pay rates to be confidential and a trade secret because it has independent economic value, is not readily available to the public, and allows JDI to maintain a competitive advantage. JDI asserted it made reasonable efforts to maintain the secrecy of the Personnel Documents and JDI would be put at an unfair competitive disadvantage if a competitor received the information. JDI noted its ability to participate in the bidding process is dependent on the number of pending projects and the availability of skilled employees to participate in the potential project. According to JDI, if a competitor knew JDI's wage rates, it could lure away JDI's skilled employees with higher pay and directly impact JDI's ability to participate in the bidding process or work on current projects. JDI alleged it would take years to hire and train plumbers to replace the ones that left. JDI also alleged it had to withdraw from three projects because of its decreased manpower, which resulted in $2.5 million in lost revenue and damaged JDI's reputation.
In support of its motion for a preliminary injunction, JDI submitted affidavits from Locklair and David Dozer, JDI's Executive Vice President, that indicated their belief that the Personnel Documents were trade secrets and confidential information and that Israel used that information to solicit JDI employees to work for PSI. JDI also produced Israel's June 8 email, a log showing which documents were accessed in ShareFile on June 24 on Israel's iPad, and the July 13 email Dobbins sent to Israel's JDI email. Israel submitted Strickland's affidavit-which included Strickland's denial that Israel approached him to leave JDI and work for PSI-and an affidavit of his own in which Israel denied he had a personal copy of the Personnel Documents or was soliciting any employee at JDI to work for PSI. Israel also produced his phone's call history with Locklair for June 22-25 and the June 25 email from Locklair.
Following a hearing, at which no witnesses testified, the circuit court issued an order granting a preliminary injunction based on all four claims. This appeal followed.
I. Did the circuit court err in issuing a preliminary injunction by finding JDI demonstrated a likelihood to succeed on the merits when no facts support the assertion that Israel possessed or misappropriated JDI's trade secret or confidential information?
II. Did the circuit court err in finding JDI demonstrated a likelihood to succeed on the merits when the court relied exclusively on hearsay and speculative statements in affidavits outside the affiants' personal knowledge to find Israel solicited JDI employees?
III. Did the circuit court err by improperly "balancing the equities" between the parties by comparing the alleged harm to each party to support issuing a preliminary...
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