Softchoice Corp. v. Mackenzie

• Decision Date: 02 July 2009
• Docket Number: No. 8:08CV249.,8:08CV249.
• Citation: 636 F.Supp.2d 927
• Parties: SOFTCHOICE CORPORATION, Plaintiff, v. Brett MacKENZIE, Defendant.
• Court: U.S. District Court — District of Nebraska

636 F.Supp.2d 927

SOFTCHOICE CORPORATION, Plaintiff, v. Brett MacKENZIE, Defendant.

No. 8:08CV249.

United States District Court, D. Nebraska.

July 2, 2009.

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Gail S. Perry, Baylor, Evnen Law Firm, Lincoln, NE, Joseph G. Schmitt, Katie M. Connolly, Teresa J. Kimker, Halleland, Lewis Law Firm, Minneapolis, MN, for Plaintiff.

Mary K. O'Connor, Tara A. Stingley, Cline, Williams Law Firm, Omaha, NE, for Defendant.

MEMORANDUM AND ORDER

JOSEPH F. BATAILLON, Chief Judge.

This matter is before the court on the defendant's motion for summary judgment, Filing No. 24. The plaintiff alleges breach of a confidentiality agreement, and asserts tort claims for misappropriation of confidential information and trade secrets, unfair competition, and tortious interference with business contracts and relationships with customers and with Softchoice's former employee, Jeffrey Lawrence. Jurisdiction is premised on diversity of citizenship.

The plaintiff alleges that its former employee, Brett MacKenzie, breached a confidentiality agreement by sharing confidential information and trade secrets with his present employer and tortiously interfered with its contractual relationships with customers and with another former employee, Jeffrey Lawrence, by inducing Lawrence to breach his nondisclosure and nonsolicitation or noncompete agreement. The plaintiff also contends that these actions amount to unfair competition. Softchoice contends that its customer list that has been compiled over time to include "pricing, profit margins, key customer contacts, product mix, customer preferences, and future opportunities" is not publicly available and is protected as a trade secret. Filing No. 29, Brief at 24.

In his motion for summary judgment, MacKenzie argues that the undisputed facts in this case show he is entitled to judgment on all five of the plaintiff's claims. He first asserts that the doctrine of collateral estoppel bars the plaintiff's claims because a Minnesota state court has determined that the information at issue is not a trade secret in another case involving Softchoice.¹ He next argues that Softchoice cannot prevail on its claims for breach of contract, misappropriation of trade secrets, or unfair competition because the evidence establishes that the information he is alleged to have misappropriated in violation of the contract is not a trade secret. He further argues that his confidentiality agreement with Softchoice is void for lack of consideration and contends he is entitled to judgment on the tortious interference claim because Softchoice had no legitimate expectancy of continuity of business relationships with customers or of its employment relationship with an at-will employee. He argues that neither Lawrence's confidentiality agreement nor covenant not to compete can form the basis of that expectation because the customer information is not secret and the covenant not to compete is overly broad and void under Nebraska law.

I. FACTUAL BACKGROUND

The undisputed evidence shows that the defendant, Brett MacKenzie, was employed by Softchoice's predecessor Software Plus, Ltd. ("Software Plus"), a Missouri corporation based in St. Louis, as a sales representative from October 2000 to December 2007. Software Plus was acquired by Softchoice Corporation ("Softchoice") in December 2007. MacKenzie resigned shortly thereafter. Software Plus and Softchoice are both resellers of computer software and hardware and related technology services known as Large Account Resellers/Enterprise Software Advisors ("LAR/ESA"). They sell software such as MSWindows, MS Office, Norton Anti-Virus, from manufacturers such as Microsoft and Symantec to business, governmental agencies and academic institutions. Filing No. 26, Index of Evid., Ex. 2, Affidavit of Michael Rapp, ("Rapp Aff.") at 1. The defendant's present employer, En Pointe Technologies ("En Pointe"), is also an LAR/ESA and competes with Softchoice. Id., Ex. 1, Affidavit of Brian MacKenzie ("MacKenzie Aff.") at 1.

On June 30, 2004, the vice president of Software Plus asked MacKenzie to execute a Confidentiality and Nondisclosure Agreement. Id., MacKenzie Aff., Ex. A, Confidentiality and Nondisclosure Agreement ("MacKenzie Conf. Agr."). The agreement provides that:

Employee shall not disclose, communicate, divulge, furnish to, or convey to any other person or entity any portion of the Confidential Information obtained by Employee in connection with this Agreement. Employee shall restrict the custody, possession, knowledge, compilation, preparation and use of any and all such Confidential Information to Employee. Employee acknowledges that he/she is subject to and this Agreement is governed by the Missouri Uniform Trade Secrets Act.

Id. at 3. The information protected by the Confidentiality Agreement is:

technical, financial and/or business information pertaining to Company or any company owned partially or fully by owners of Company ("Affiliate") which is not published or readily available to the public, including, but not limited to, any and all Trade Secrets (defined as all information, including but not limited to, technical or non-technical data, a formula, pattern, compilation, program, device, method, technique, or process, that derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use), computer software, computer programs, program code, software libraries, databases, bids, proposals, plans, projections, strategies, designs, procedures, training methods, techniques, know how, methods of operation, marketing concepts and plans, manuals, mailing lists, pricing lists and information, sources of supplies, and lists of and other information pertaining to and/or received from customers (including potential customers) and/or supplies and Employee Work Product described in Section 1(b) hereof ("Confidential Information").

Id. at 1. Information that "becomes available to the Employee from a person or entity who is not the Company and who is not otherwise bound by a confidentiality agreement with the Company or affiliate" is expressly excluded from the definition of confidential information. Id. at 2.

Before signing the agreement, the defendant asked for clarification to verify his understanding that the agreement would not restrict him from contacting his former customers if he were to leave employment at Software Plus. Id., MacKenzie Aff. at 3, Ex. C, email correspondence at 2. The response included a legal opinion stating that

[t]he agreement is NOT a noncompete agreement and your employees would be able to compete with the company after termination of employment. . . . The only restrictions in this agreement prohibit the use of confidential information after employment is terminated. . . . The employees can definitely call on SWP customers after employment terminates so long as they do not use confidential information of SWP which could include the needs of the customer based upon information of SWP.

Id., email correspondence at 4. MacKenzie signed the Confidentiality Agreement on July 7, 2004. Id., Ex. 1, MacKenzie Aff. at 2. The Confidentiality Agreement provides that consideration for the agreement was "continued engagement by Company and compensation paid and/or to be paid by Company to Employee in connection therewith, and other good and valuable consideration." Id., MacKenzie Conf. Agr. at 1.

On December 11, 2007, Softchoice completed the acquisition of Software Plus. Id., Ex. 1, MacKenzie Aff. at 2. MacKenzie stated in his affidavit that he was told that his salary would be reduced by 30%. Id. at 3-4. On January 2, 2008, MacKenzie resigned from his employment with Softchoice and began working in a similar capacity for En Pointe Technologies ("En Pointe") the following day. Id.

MacKenzie has submitted evidence that the identity of Softchoice's customers, the relevant contact people for each customer, the customers' needs and product mix, and pricing to individual customers is information generally available to the public and to people within the industry. Filing No. 26, Index of Evid., Ex. 1, MacKenzie Aff. at 4; Ex. 2, Rapp Aff. at 2-4. MacKenzie has shown that the information can be obtained through commercially available lists of potential customers, customer Web sites, manufacturers such as Microsoft who supply resellers with information on potential customers, a Web site known as explore.ms, which is available to anyone working for LAR/ESA and provides information relating to customer needs, membership in social networks such as "LinkedIn.com," sources such as Hoovers (a Dun & Bradstreet company), InfoUSA, Leads.com, Iridium information resources, the Omaha Book of Lists, a Web site known as Licensing.microsoft.com, made available to all Microsoft resellers, and from the customers themselves. Id., Ex. 1, MacKenzie Aff. at 5-7; Ex. 2, Rapp Aff. at 2-3; Filing No. 37, Rebuttal Affidavit of Brett MacKenzie ("MacKenzie Rebuttal Aff.") at 3-4; Filing No. 38, Index of Evid., Ex. E, "www.explore.ms" Web site listing for West Corporation.

The defendant has also shown by affidavit that within the LAR/ESA industry, customers readily and routinely supply information on their IT needs, contracts and pricing information with competitors in order to obtain the best prices for their company. Filing No. 37, MacKenzie Rebuttal Aff. at 7. MacKenzie and Softchoice have both produced evidence that MacKenzie obtained pricing information from customers, including Nebraska Furniture Mart, Pinnacle Data, and Sitel, as well as from suppliers such as Symantec. See, e.g., Filing No. 38, Exs. F & G, email correspondence between MacKenzie and Nebraska Furniture Mart; Exs. H & I, email correspondence between MacKenzie and Sitel Corp.; Filing No. 30, Index...