Pro Edge L.P. v. Gue
| Decision Date | 31 January 2006 |
| Docket Number | No. C05-4068-MWB.,C05-4068-MWB. |
| Parties | PRO EDGE L.P. d/b/a Trans Ova Genetics, Inc. and Trans Ova Genetics, L.C. f/k/a Trans Ova Genetics, Inc., Plaintiffs, v. Charles S. GUE, III, DVM Defendant. |
| Court | U.S. District Court — Northern District of Iowa |
Charles T. Patterson, Joel D. Vos, Margaret M. Prahl, Sioux City, IA, for Plaintiff.
Richard H. Moeller, Berenstein Moore Berenstein Heffernan & Moeller, LLP, Sioux City, IA, for Defendant.
TABLE OF CONTENTS
I. INTRODUCTION AND FACTUAL BACKGROUND............................1082
A. Procedural Background......................................1082
B. Factual Background.........................................1085
II. LEGAL ANALYSIS.................................................1086
A. Standards For Modification Of A Preliminary Injunction.....1086
B. Arguments Of The Parties...................................1088
1. The defendant's arguments for modification...............1088
2. The plaintiffs' arguments in resistance..................1089
C. Modification...............................................1090
1. Changed circumstances....................................1090
2. Equity...................................................1091
III. CONCLUSION.....................................................1095
On June 1, 2005, this court granted the application for a preliminary injunction of a limited liability company seeking to protect their existing and prospective business contracts with cattle producers requiring embryo transfer services by enjoining a former employee from violating the noncompetition provisions of his employment agreement. The portion of the preliminary injunction enjoining the former employee's performance of services similar to those he provided while employed as a veterinarian by his former employer was to remain in effect until trial on the merits of the plaintiffs' claims, unless it was subsequently modified or dissolved. Now, several months premature of the expected trial date, the defendant seeks a modification of the preliminary injunction that will allow him to begin competing with the plaintiffs prior to the scheduled trial date. In its June 1, 2005 order, this court found that equity required the issuance of the preliminary injunction in this case. The question now before the court is whether equity also requires a modification of the preliminary injunction in light of subsequent developments.
The procedural and factual background precipitating this controversy is discussed extensively in this court's prior ruling. See Pro Edge, L.P. v. Gue, 374 F.Supp.2d 711 (N.D.Iowa 2005). The court will therefore present here only a brief synopsis of the procedural and factual background pertinent to the current matter before the court.
On April 29, 2005, the plaintiffs in this action, Pro Edge, L.P. ("Pro Edge"), an Iowa limited partnership,1 and Trans Ova Genetics, L.C.,2 an Iowa limited liability company, filed a petition in the Iowa District Court for Sioux County, Iowa, against defendants Charles S. Gue, III, DVM ("Dr. Gue"), a former employee of Trans Ova Genetics, L.C., and Progenesis Embryo Transfer, Ltd. ("Progenesis"), a wholly-owned Montana corporation created by Dr. Gue. The plaintiffs' business includes embryo transfer services for cattle producers in several states, including Illinois, Iowa, Missouri, Montana and Oklahoma. The complaint was in five counts, but its chief concerns involved fears of disclosure of trade secrets and violation of a noncompetition agreement supposedly signed by Dr. Gue.3 On April 29, 2005, the Iowa District Court for Sioux County entered an ex parte temporary restraining order enjoining Dr. Gue from providing embryo transfer services including, but not limited to, in vitro fertilization to any individuals or entities that are cattle producers that have been customers of Trans Ova's Belgrade, Montana, office within the 12-month period prior to the date of Dr. Gue's separation from employment on April 8, 2005. The order stated that it would become effective upon the filing of a bond in the amount of $30,000 with the Clerk of the Iowa District Court for Sioux County and the issuance of a writ of injunction. The plaintiffs posted the necessary bond and the Writ of Injunction issued on April 29, 2005. The plaintiffs represent they provided notice of the temporary restraining order to Dr. Gue's counsel on May 1, 2005. However, they contend that Dr. Gue "evaded service" of the temporary restraining order until May 11, 2005.
On May 16, 2005, the defendants removed this action to this federal court. (Doc. No. 2). On May 18, 2005, the plaintiffs filed a Motion To Extend Temporary Restraining Order and Request For Hearing On Preliminary Injunction in which the plaintiffs sought both an extension of the ex parte temporary restraining order issued by the Iowa District Court for Sioux County, as well as a hearing on the accompanying motion for a preliminary injunction. (Doc. No. 3). On May 19, 2005, this court entered an order extending the temporary restraining order to and including May 24, 2005, and setting a hearing on the plaintiffs' Motion For Preliminary Injunction for May 24, 2005. (Doc. No. 4). On May 20, the defendants filed a Motion To Dismiss and Request For Hearing, in which the defendants alleged, among other arguments, that the court lacked personal jurisdiction over all of the named defendants.
Following the May 24, 2005, preliminary injunction evidentiary hearing, a number of troublesome legal questions remained outstanding. Accordingly, the court allowed the parties to submit, by letter brief, case law addressing the more complex legal questions before the court. Following the receipt of the parties' briefs, the court entertained oral argument on the plaintiffs' Motion For Preliminary Injunction and the defendants' Motion To Dismiss on May 26, 2005. On June 1, 2005, this court issued its Memorandum Opinion and Order Regarding Plaintiffs' Motion For Preliminary Injunction; Defendants' Motion To Dismiss; and Preliminary Injunction. Essentially, with respect to the Defendants' Motion To Dismiss, the court's June 1, 2005, order granted the motion with respect to defendant Progenesis for lack of personal jurisdiction, thus leaving Dr. Gue as the sole remaining defendant in the controversy. The defendants' remaining arguments were denied. With respect to the plaintiffs' Motion To Extend Temporary Restraining Order and Request For Hearing on Preliminary Injunction, the court granted the plaintiffs' motion. Accordingly, the court entered a preliminary injunction, which enjoined the defendant, Dr. Gue, from performing any services similar to those he provided while employed at Trans Ova Genetics, L.C. (Doc. No. 18).4 On July 10, 2005, Dr. Gue filed a Motion To Amend Findings and Judgment and/or For Reconsideration and Request For Nonevidentiary Hearing (Doc. No. 21). The plaintiffs filed their Resistance To Motion To Amend and/or Reconsider on June 21, 2005 (Doc. No. 24). Prior to the court's ruling on Dr. Gue's Motion To Amend, the defendants filed a timely Notice of Appeal (Doc. No. 25) and corresponding Motion For Certification (Doc. No. 26) on June 30, 2005. On July 5, 2005, this court denied Dr. Gue's Motion To Amend Findings and Judgment and/or Reconsideration and Request For Nonevidentiary Hearing (Doc. No. 30). On this same day, the court also granted Dr. Gue's Motion For Certification (Doc. No. 31). Pursuant to the Trial Management Order (Doc. No. 46) filed on January 5, 2006, trial on this matter is set for June 26, 2006 (Doc. No. 46).
On November 4, 2005, Dr. Gue moved to modify the preliminary injunction by fixing a specific date, prior to the anticipated trial date, for the dissolution of the preliminary injunction (Doc. No. 42). The plaintiffs resisted Dr. Gue's motion by filing a Resistance To Motion To Modify Preliminary Injunction on November 10, 2005 (Doc. No. 43). Oral argument on Dr. Gue's Motion To Modify Preliminary Injunction and Request For Hearing was held on January 25, 2006. At the hearing on January 25, 2006, Trans Ova was represented by Charles T. Patterson, Margaret Prahl and Joel Vos, of Heidman Redmond Fredregill Patterson Plaza Dykstra & Prahl in Sioux City, Iowa. Dr. Gue was represented by Richard H. Moeller of Berenstein Moore Berenstein Heffernan & Moeller, L.L.P., in Sioux City, Iowa. The motion for modification of the preliminary injunction is now fully submitted, and the court must decide the merits of the defendant's request.
Trans Ova Genetics, Inc.,5 hired Dr. Gue as an embryo transplant specialist at its Sioux Center, Iowa facility in 1990. During his tenure at Trans Ova Genetics, Dr. Gue executed an Employment Agreement that contained a non-compete clause, which essentially prohibited him from performing similar services within a 250-mile radius of any Trans Ova Genetics facility for one year following his separation from employment.6 The Employment Agreement further contained a choice of law provision that indicated the agreement was to be construed pursuant to the laws of the state of Iowa.7 Dr. Gue remained a loyal employee of Trans Ova Genetics, L.C. until early in 2005, at which time he began contemplating resigning his veterinary position with the company. In late February, Dr. Gue approached an embryologist at the Belgrade, Montana, facility, and discussed whether she would leave Trans Ova Genetics, L.C. to work with him should his plans to terminate his employment with Trans Ova Genetics, L.C. and branch out on his own come to fruition. In March 2005, Dr. Gue...
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