MiTek Inc. v. McIntosh
| Docket Number | 4:23-CV-960 RLW |
| Decision Date | 11 September 2023 |
| Parties | MITEK INC., Plaintiff, v. MIKE MCINTOSH, Defendant. |
| Court | U.S. District Court — Eastern District of Missouri |
This matter is before the Court on Plaintiff MiTek Inc.'s Motion for Preliminary Injunction against Defendant Mike McIntosh. (ECF No. 38). The case arises out of the alleged breach of the Covenant of Employment (“Covenant”) between MiTek and McIntosh. In its Verified Complaint, MiTek asserts claims for breach of contract, tortious interference with business expectancy, violations of the Defend Trade Secrets Act, 18 U.S.C. § 1831, et seq. (“DTSA”), and violations of the Missouri Uniform Trade Secrets Act, Mo. Rev. Stat. § 417.450, et seq. (“MUTSA”). MiTek moves for the entry of a preliminary injunction against McIntosh on all claims. For the reasons below, the Court will deny MiTek's Motion for Preliminary Injunction.
MiTek filed this action on August 1, 2023, and immediately moved for a temporary restraining order (“TRO”). (ECF Nos. 1, 6). Despite several attempts at service, MiTek was unable to personally serve McIntosh with the Summons Verified Complaint, Motion for TRO, and Notice of Hearing. (ECF No. 11). MiTek then requested an ex parte hearing on its Motion for TRO. (ECF No. 12). The Court heard oral argument on August 11, 2023, and issued a TRO against McIntosh on August 14, 2023. (ECF Nos. 15, 20). McIntosh filed a motion for rehearing and a motion for contempt. (ECF Nos. 19, 21). The Court denied the former and the latter remains pending. (ECF No. 20).
McIntosh moved to dissolve the TRO on August 18, 2023. (ECF No. 24). At the hearing on August 28, 2023, both parties presented argument and evidence concerning the dissolution of the TRO. After careful consideration, the Court denied McIntosh's Motion to Dissolve and extended the TRO to September 11, 2023. (ECF No. 43).
The Court held a hearing on MiTek's Motion for Preliminary Injunction on September 8, 2023, at which time MiTek and McIntosh were allowed to present evidence and argument. MiTek presented two witnesses and McIntosh presented none. Both parties have submitted proposed findings of fact and conclusions of law for the Court's consideration. (ECF Nos. 58, 61).
After careful review, the Court makes the following findings of fact and conclusions of law pursuant to Rule 52(a)(1) of the Federal Rules of Civil Procedure.
1. MiTek provides integrated software, services, engineered products, and automated solutions for the building industry. MiTek's business includes the licensing of truss design software used by its customers to design and fabricate roof trusses, floor trusses, and wall panels using MiTek's metal products. MiTek also manufactures and/or sells automation machinery that its customers use to fabricate trusses and wall panels.
2. McIntosh worked for MiTek as a District Sales Manager or Regional Sales Manager, servicing the Southeast region of the United States, including North Carolina, South Carolina, Georgia, Virginia, and West Virginia.
3. Around June 2020, MiTek underwent an internal corporate restructuring. As part of the restructuring, MiTek presented McIntosh with an offer letter for the position of Regional Sales Manager. The position came with a pay increase.
4. As a condition of the salary increase and continued employment, McIntosh was required to enter into the Covenant by Employee (“Covenant”), which contains non-competition, non-solicitation, and non-disclosure provisions.
5. McIntosh signed the offer letter on July 6, 2020.
6. McIntosh signed and returned the Covenant by email on July 9, 2022. No representative of MiTek signed the Covenant. No company is listed on the Covenant.
7. On April 4, 2023, Laura Sarratt, MiTek's Senior Director of Human Resources, met with McIntosh's managers, Todd Snyder (Regional Sales Manager) and Phil Harms (Area Vice President), to discuss concerns they had with McIntosh's job performance.
8. On April 19, 2023, Snyder and Sarratt met with McIntosh to discuss his future. They gave McIntosh two options: (1) He could accept a performance improvement plan (“PIP”); or (2) He could resign.
9. During the April 19, 2023, McIntosh told Sarratt and Snyder that he wanted to resign his employment with MiTek. The parties agreed that May 1, 2023, would be McIntosh's final day of employment with MiTek. The parties did not discuss termination.
10. MiTek offered McIntosh a separation agreement.
11. McIntosh's resignation was not contingent upon the terms of the separation agreement.
12. On April 20, 2023, McIntosh sent a text message to Snyder stating that Snyder could tell others that McIntosh was resigning his position.
13. Prior to May 1, 2023, McIntosh told other MiTek employees that he was resigning his position with the company.
14. On April 28, 2023, McIntosh sent an email to Sarratt stating that the terms of the separation agreement were unacceptable and that he intended to continue working for MiTek.
15. McIntosh's last day of employment with MiTek was May 1, 2023.
16. After May 1, 2023, McIntosh accepted new employment as a Regional Eastern Manager at Eagle Metal Products.
17. McIntosh has knowledge of MiTek's trade secret and confidential information including its business plans and strategies, customer lists, customer pricing and purchase volume, expansion plans, products, software, marketing planes, business strategies, research, budgets, forecasts, sales and profits, and other proprietary information relating to MiTek's business.
18. Since May 1, 2023, McIntosh has been in contact with individuals who work for MiTek's customers.
In determining whether to issue preliminary injunctive relief, this Court considers the following factors: (1) the probability that the movant will succeed on the merits; (2) the threat of irreparable harm to the movant; (3) the balance between this harm and the injury that granting the injunction will inflict on the nonmovant; and (4) the public interest. Home Instead, Inc. v. Florance, 721 F.3d 494, 497 (8th Cir. 2013) (citing Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109, 113 (8th Cir. 1981) (en banc)). The inquiry is “whether the balance of equities so favors the movant that justice requires the court to intervene to preserve the status quo until the merits are determined.” Dataphase Sys., 640 F.2d at 113.
The likelihood of success is the most important factor. Roudachevski v. All-Am. Care Centers, Inc., 648 F.3d 701, 706 (8th Cir. 2011). This factor directs courts to ask whether the party requesting a preliminary injunction has a “fair chance of prevailing.” Planned Parenthood Minn., N. Dak., S. Dak. v. Rounds, 530 F.3d 724, 732 (8th Cir. 2008) (en banc). Even when a plaintiff has a strong claim on the merits, however, “[f]ailure to demonstrate irreparable harm is a sufficient ground to deny a preliminary injunction.” Phyllis Schlafly Revocable Tr. v. Cori, 924 F.3d 1004, 1009 (8th Cir. 2019) (quoted case omitted). “Irreparable harm occurs when a party has no adequate remedy at law, typically because its injuries cannot be fully compensated through an award of damages.” Gen. Motors Corp. v. Harry Brown's, LLC, 563 F.3d 312, 319 (8th Cir. 2009). The moving party bears the burden to establish the need for injunctive relief. Chlorine Inst., Inc. v. Soo Line R.R., 792 F.3d 903, 914 (8th Cir. 2015).
To demonstrate a likelihood of success on the merits, a movant need not show that it will ultimately succeed on its claims; rather, it must show that its prospect for success is sufficiently likely to support the kind of relief it requests. Noodles Dev., LP v. Ninth St. Partners, LLP, 507 F.Supp.2d 1030, 1034 (E.D. Mo. 2007) (citing Sanborn Mfg. Co. v. Campbell Hausfeld/Scott Fetzer Co., 997 F.2d 484, 488 (8th Cir. 1993)). That is, a movant need only show that it has a “fair chance of prevailing.” Planned Parenthood Minn., 530 F.3d at 732-33.
The parties do not dispute that Missouri law applies to MiTek's claim for breach of contract. The parties do dispute, however, whether the Covenant constitutes a valid and enforceable contract.
The essential elements of a contract under Missouri law are offer, acceptance, and consideration. Baker v. Bristol Care, Inc., 450 S.W.3d 770, 774 (Mo. banc 2014) (citation omitted). “Offer and acceptance ‘require there to be a mutual agreement, i.e., a meeting of the minds between the contracting parties, which means the parties meet upon and assent to the same thing, in the same sense, and at the same time.'” SL EC, LLC v. Ashley Energy, LLC, 561 F.Supp.3d 802, 815 (E.D. Mo. 2021) (quoting EM Med., LLC v. Stimwave LLC, 626 S.W.3d 899, 907 (Mo.Ct.App. 2021)). In assessing whether there was a meeting of the minds, the Court must consider the parties' “objective manifestations of intent.” Id. (quoting Best Buy Builders, Inc. v. Siegel, 409 S.W.3d 562, 565 (Mo.Ct.App. 2013)).
The elements of a breach-of-contract claim in Missouri are: (1) the existence and terms of a contract; (2) that the plaintiff performed or tendered performance pursuant to the contract; (3) breach of the contract by the defendant; and (4) damages suffered by the plaintiff. Goldsmith v. Lee Enterprises, Inc., 57 F.4th 608, 612 (8th Cir. 2023).
Missouri courts generally enforce non-competition agreements that are “demonstratively reasonable.” Whelan Sec. Co v. Kennebrew, 379 S.W.3d 835, 841 (Mo. 2012) (en banc). “A noncompete agreement is reasonable if it is no more restrictive than is necessary to protect the legitimate interests of the employer.” ...
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