Snap! Mobile, Inc. v. Vertical Raise

• Docket Number: Docket No. 49418,Docket No. 49483
• Decision Date: 28 March 2024
• Citation: 544 P.3d 714
• Parties: SNAP! MOBILE, INC., a Delaware corporation, Plaintiff-Respondent, v. VERTICAL RAISE, LLC, an Idaho limited liability company; and Paul Landers; individually, Defendants-Appellants. Snap! Mobile, Inc., a Delaware corporation, Plaintiff-Appellant, v. Vertical Raise, LLC, an Idaho limited liability company; and Paul Landers, individually, Defendants-Respondents, and Paul Croghan, Interested Party-Respondent.
• Court: Idaho Supreme Court

544 P.3d 714

SNAP! MOBILE, INC., a Delaware corporation, Plaintiff-Respondent,

v.

VERTICAL RAISE, LLC, an Idaho limited liability company; and Paul Landers; individually, Defendants-Appellants.

Snap! Mobile, Inc., a Delaware corporation, Plaintiff-Appellant,

v.

Vertical Raise, LLC, an Idaho limited liability company; and Paul Landers, individually, Defendants-Respondents,

and

Paul Croghan, Interested Party-Respondent.

Docket No. 49418, Docket No. 49483

Supreme Court of Idaho, Boise, September 2023 Term.

Opinion Filed: February 2, 2024

Rehearing Denied: March 28, 2024

544 P.3d 722

Appeal from the District Court of the First Judicial District of the State of Idaho, Kootenai County, John T. Mitchell, District Judge.

The judgment of the district court is affirmed in part and reversed in part.

Appeal from the District Court of the First Judicial District of the State of Idaho, Kootenai County, Lamont C. Berecz, District Judge.

The judgment of the district court is affirmed.

Stoel Rives, LLP, Boise, for Appellants Vertical Raise, LLC, and Paul Landers. W. Christopher Pooser argued.

Lake City Law Group, PLLC, Coeur d’Alene, for Appellants Vertical Raise, LLC, and Paul Landers. Nathan Ohler appeared.

Duke Evett, PLLC, Boise, for Respondent Snap! Mobile, Inc. Keely E. Duke argued.

Duke Evett, PLLC; Boise, for Appellant Snap! Mobile, Inc. Emma Nowacki argued.

Owens, McCrea & Linscott, PLLC, Coeur d’Alene, for Respondent Paul Croghan. April Linscott argued.

Bolton Law, PLLC, Coeur d’Alene, for Respondents Vertical Raise, LLC, and Paul Landers. K. Jill Bolton argued.

Lake City Law Group, PLLC, Coeur d’Alene, for Respondents Vertical Raise, LLC, and Paul Landers. Nathan Ohler appeared.

BRODY, Justice.

This appeal concerns the modification of a jury’s verdict and a challenge to an injunction on overbreadth grounds and for lack of specificity under Idaho Rule of Civil Procedure 65(d). There are two separate proceedings at issue involving many of the same

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participants but with two different district judges. The first proceeding (Supreme Court Docket Number 49418) involved a jury trial in which the district court (Judge John T. Mitchell or "trial court") granted an additur or a new trial following a jury’s verdict. The second proceeding (Supreme Court Docket Number 49483) involved a challenge to contempt enforcement of a preliminary injunction which was originally issued by the trial court. However, the trial court later recused itself and the case was thereafter assigned to a different district court judge (Judge Lamont C. Berecz or "contempt court").

Snap! Mobile, Inc. ("Snap") and Vertical Raise, LLC, ("Vertical Raise") are competing online fundraising companies that work with schools, clubs, and coaches to raise money through online donation campaigns. In 2019, Snap filed suit against Vertical Raise and its CEO Paul Landers (collectively "VR/Landers"), alleging tortious interference with contract, misappropriation of trade secrets, and common law unfair competition. Snap alleged that VR/Landers poached its sales representatives and customers knowing that this would violate non-compete and confidentiality provisions contained in the former sales representatives’ employment agreements with Snap.

The trial court granted Snap a preliminary injunction to enforce provisions of its employment agreements and also granted partial summary judgment in favor of Snap on liability for its tortious interference with contract and misappropriation of trade secrets claims. The damages issue proceeded to trial in which a jury awarded Snap $1,000,000. On Snap’s post-trial motion, the trial court entered an additur increasing the jury’s total award to $2,310,021 and gave VR/Landers the option of either accepting the additur or having a new trial. The trial court also entered a permanent injunction against VR/Landers.

While the trial court case was pending, before the trial took place, Snap alleged violations of the preliminary injunction and brought motions for contempt against VR/Landers and Paul Croghan ("Croghan"), an independent contractor for Vertical Raise. The trial court recused itself from the contempt matters after it recognized that it had committed a procedural error, and the contempt matters were then reassigned to the contempt court, which subsequently dismissed the contempt charges after concluding the terms of the preliminary injunction were vague and overbroad and could not be enforced.

On appeal, VR/Landers argues that the trial court erred in (1) granting the additur or new trial, (2) awarding discretionary costs to Snap for its expert witness fees, and (3) entering a permanent injunction against VR/Landers.

In a separate appeal which has been consolidated for purposes of this opinion, Snap contends that the contempt court erred in dismissing the contempt charges because VR/Landers and Croghan were procedurally barred from challenging the preliminary injunction in a collateral proceeding and because the injunction complied with the specificity requirements of Idaho Rule of Civil Procedure 65(d). We affirm the decisions of the trial court in part and reverse in part and remand this case for further proceedings. We affirm the decision of the contempt court.

I. Factual and Procedural Background

Snap is an online software platform that works with schools, clubs, and nonprofit organizations to raise money through online donation campaigns. Since 2013, Snap compiled financial, sales, and business data from its campaigns into a proprietary database, which it refers to as the Snap Database. In 2018, Snap’s sales representatives signed agreements that included restrictive covenant provisions addressing confidentiality (Section 4.1), non-competition (Section 4.3), non-acceptance of business (Section 4.4), and non-solicitation (Section 4.5). Snap’s Employment Agreement for sales representatives in California did not include a non-compete clause, but contained limitations on sales representatives’ use of confidential, proprietary, and trade secret information.

Vertical Raise is a competing online fund-raising company formed by Paul Landers. In 2018, Vertical Raise began recruiting Snap’s sales representatives. When hiring former

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Snap employees, Vertical Raise knew that those employees had agreements with Snap and that the agreements included non-compete and/or confidentiality provisions. Vertical Raise also encouraged former Snap employees to target Snap’s customers.

A. Complaint and Preliminary Injunction

In December 2019, Snap filed suit against VR/Landers, alleging tortious interference with contract, misappropriation of trade secrets, various violations of unfair competition laws, and civil conspiracy. The trial court granted partial summary judgment to Snap on the issue of liability for its claims of tortious interference with contract and misappropriation of trade secrets.

The trial court also granted Snap’s request for a preliminary injunction, stating that the "evidence provided shows that Vertical Raise has made a concerted effort to solicit and employ [Snap] employees, knowingly conflicting with those employees’ valid contracts with [Snap]." The preliminary injunction prohibited Vertical Raise, Landers, and, "anyone acting in concert or on behalf of" Vertical Raise from engaging in certain conduct, which included soliciting, transacting, or accepting business with former Snap customers or business partners or paying a sales representative for such activities. The order further prohibited VR/Landers from "aiding or abetting" the former Snap employees in breaching their employment contracts, recruiting Snap sales representatives, and "using Snap[]’s confidential, trade secret information including, without limitation, customer lists, compilations of customer information and/or pricing information." No exceptions were made for the California representatives, who were not subject to non-compete and non-solicitation covenants.

B. Contempt Proceedings

Snap filed multiple motions to hold VR/Landers in contempt of court for alleged violations of the preliminary injunction order. Snap sought both civil and criminal sanctions. The trial court summarily granted the motions for criminal contempt without affording VR/Landers a jury trial and without charging or arraigning VR/Landers as required by Idaho Rule of Civil Procedure Rule 75. After recognizing its procedural error, the trial court rescinded its prior orders sanctioning VR/Landers for criminal contempt and then recused itself from presiding over further contempt proceedings in this case, which were reassigned to the contempt court.

Shortly before trial, Snap filed its fourth motion for contempt requesting $290,000 in fines against VR/Landers and 175 days of jail time against Landers. During the damages trial, Snap filed a separate motion for contempt requesting $80,000 in fines and 80 days of jail time against Paul Croghan, a non-party to this litigation. Croghan is a former employee of Snap who works as an independent contractor for Vertical Raise. Croghan lives and works exclusively in California. Snap alleged that Croghan was responsible for sixteen of the ninety-three violations of the preliminary injunction "by soliciting the business of, transacting business with, and accepting business from Snap[]’s Business Partners" who were located in California.

In August 2021, Croghan traveled to Idaho to testify on behalf of Vertical Raise. During a break in his testimony, the trial court, at Snap’s request, directed the parties and Croghan into different courtrooms and had the bailiff serve Croghan with Snap’s motion for contempt. The trial court stated, "[t]he record will reflect that Mr. Croghan has been served with those documents, and I do have concerns about my jurisdiction." After Croghan was served with the contempt motion, three Vertical Raise witnesses fled the courthouse without testifying or being served.

Croghan and VR/Landers subsequently filed...