SPBS, Inc. v. John D. Mobley & Intermed Grp. Servs., Inc.
| Decision Date | 31 August 2018 |
| Docket Number | Civil Action No. 4:18-CV-00391 |
| Parties | SPBS, INC., v. JOHN D. MOBLEY AND INTERMED GROUP SERVICES, INC. |
| Court | U.S. District Court — Eastern District of Texas |
MEMORANDUM OPINION AND ORDER
Pending before the Court is SPBS, Inc.'s ("SPBS") Application for a Preliminary Injunction against Defendants John D. Mobley ("Mobley") and Intermed Group Services, Inc.1 ("Intermed") (Dkt. #3). After reviewing the relevant pleadings and motion, the Court finds that the motion should be granted.
SPBS provides services for clinical and diagnostic medical equipment management, inspection, maintenance, and repair for "hospitals, surgical centers, clinics, physician offices, manufacturers of healthcare equipment and devices, and other healthcare facilities." (Dkt. #1 at p. 3). SPBS has offices and customers in Texas, Missouri, New Jersey, New Mexico, and Oklahoma.
Mobley joined SPBS in October 2009, as Assistant Sales Director. Thereafter, SPBS promoted Mobley to National Sales and Imaging Director in June 2010 and to Director of National Sales in August 2011. In these roles, Mobley managed sales teams, sales budgets, and "nationalaccount relationships." (Dkt. #1). Mobley resigned from SPBS in December 2011, explaining he was joining a company that "in some aspects [competed] with SPBS." (Dkt. #1 at p. 4).
In November 2013, Mobley returned to SPBS as Director of Sales and Marketing in its Dallas office. By signing the offer letter for the position, SPBS claims that Mobley recognized receiving and reading SPBS's Employee Handbook and agreed to comply with, among other things, its Proprietary Information and Invention as well as its Non-Competition Provisions (the "Employment Agreement").
Per the Employment Agreement, SPBS alleges that Mobley agreed not to disclose "Company Information" during or after his employment with the company. SPBS argues that the definition of "Company Information" relevantly includes (1) data compilations, (2) development databases, (3) business plans, (4) pricing strategy and cost data, (5) lists of current and potential customers, (6) strategies, methods, forecasts, and other marketing information and techniques, (7) sales practices, strategies, methods, forecasts, compensation plans, and other sales information, (8) "'know-how' (i.e. information about what works well)," and (9) "'negative know-how' (i.e. information about what does not work well)." (Dkt. #1 at pp. 4-5). SPBS contends that Mobley further agreed that he would "not directly or indirectly, for [himself] or on behalf of any other person or entity . . . use Company secret information to attempt to call on, solicit or take away any clients or prospects of [SPBS] except on behalf of the Company[]" while employed at SPBS and for one year thereafter pursuant to the Agreement (Dkt. #1 at p. 5).
Mobley worked at SPBS from 2013 to March 2018. During this time, SPBS claims to have given its confidential information and trade secrets to Mobley, such as "customer lists, marketing strategies, training and resources for specific manufacturers' equipment, and information on pricing and equipment lists for customers." (Dkt. #1 at p. 6).
In March 2018, Mobley resigned from SPBS, claiming that he was leaving to work for an oil field services distributor. SPBS, however, contends that Mobley took multiple business trips to cities "where some of SPBS's key clients are located in the days immediately following his departure from SPBS." (Dkt. #1 at p. 8). Thereafter, SPBS claims that one of its clients, with whom Mobley had worked while employed at SPBS, cancelled its contract with SPBS "effective immediately." (Dkt. #1 at p. 9). SPBS allegedly called Mobley to inquire about the canceled contract and Mobley claimed that he was not working for a competitor of SPBS. SPBS then learned that Mobley was working for Intermed—whom SPBS claims is its direct competitor.
On June 1, 2018, SPBS filed suit against Defendants, asserting claims for (1) violation of the Defend Trade Secrets Act ("DTSA") against Defendants; (2) violation of the Texas Uniform Trade Secrets Act ("TUTSA") against Defendants; (3) Computer Fraud and Abuse Act against Mobley; (4) breach of contract against Mobley; (5) breach of fiduciary duty against Mobley; and (6) tortious interference with an existing contract against Intermed (Dkt. #1). On June 4, 2018, SPBS filed its application for a preliminary injunction, asking the Court to enjoin Defendants from using SPBS's trade secrets and Mobley from soliciting SPBS's clients (Dkt. #3). On July 25, 2018, Defendants filed their response (Dkt. #13). On August 1, 2018, SPBS filed its reply (Dkt. #18). On July 27, 2018, and August 3, 2018, the Court held hearings on SPBS's motions for preliminary injunction (Dkt. #16, Dkt. #19). On August 9, 2018, SPBS filed its post-hearing brief in support of its application for preliminary injunction (Dkt. #21). On August 10, 2018, Defendants filed their post-hearing brief in opposition to SPBS's application for preliminary injunction (Dkt. #22). On August 13, 2018, SPBS filed its reply (Dkt. #23.)
A party seeking a preliminary injunction must establish the following elements: (1) a substantial likelihood of success on the merits; (2) a substantial threat that plaintiffs will sufferirreparable harm if the injunction is not granted; (3) that the threatened injury outweighs any damage that the injunction might cause the defendant; and (4) that the injunction will not disserve the public interest. Nichols v. Alcatel USA, Inc., 532 F.3d 364, 372 (5th Cir. 2008). "A preliminary injunction is an extraordinary remedy and should only be granted if the plaintiffs have clearly carried the burden of persuasion on all four requirements." Id. Nevertheless, a movant "is not required to prove its case in full at a preliminary injunction hearing." Fed. Sav. & Loan Ins. Corp. v. Dixon, 835 F.2d 554, 558 (5th Cir. 1985) (quoting Univ. of Tex. v. Comenisch, 451 U.S. 390, 395 (1981)). The decision whether to grant a preliminary injunction lies within the sound discretion of the district court. Weinberger v. Romero-Barcelo, 456 U.S. 305, 320 (1982).
For the Court to grant a preliminary injunction, SPBS must first demonstrate a substantial likelihood of success on the merits. This requires a movant to present a prima facie case. Daniels Health Scis., LLC v. Vascular Health Scis., 710 F.3d 579, 582 (5th Cir. 2013) (citing Janvey v. Alguire, 647 F.3d 585, 595-96 (5th Cir. 2011)). A prima facie case does not mean Plaintiffs must prove they are entitled to summary judgment. Byrum v. Landreth, 566 F.3d 442, 446 (5th Cir. 2009).
SPBS alleges misappropriation of trade secrets against Defendants under DTSA and TUTSA, seeking damages and injunctive relief (Dkt. #1 at pp. 12-13). SPBS argues that Defendants "misappropriated SPBS's trade secrets under the plain meaning of the statutes by taking SPBS's trade secrets, including pricing information, copies of contracts, and customer lists2(Mobley) and by receiving and using those trade secrets (Intermed)." (Dkt. #3 at p. 28). Defendants counter that whether or not SPBS's Proprietary Information qualifies as a trade secret, Defendants did not misappropriate or use it.
Under DTSA, "[a] claim for misappropriation of trade secrets requires: (1) a trade secret; (2) misappropriation; and (3) use in interstate commerce. 18 U.S.C. § 1836(b)(1). Texas has adopted TUTSA, which has similar elements to the federal act. See Tex. Civ. Prac. & Rem. Code Ann. § 134A.002; Wellogix, Inc. v. Accenture, L.L.P., 716 F.3d 867, 874 (5th Cir. 2013). Under TUTSA, a plaintiff needs to show use without authorization, but not that it was used in interstate commerce. Wellogix, 716 F.3d at 874.
"Under Section 134A.003 [of TUTSA] . . . a party may seek an injunction for actual or threatened misappropriation of trade secrets." St. Jude Med. S.C., Inc. v. Janssen-Counotte, No. A-14-CA00877-SS, 2015 WL 11438611, at *2 (W.D. Tex. Oct. 30, 2015) ). "'Proof of trade secret misappropriation often depends upon circumstantial evidence.'" GE Betz, Inc. v. Moffitt-Johnston, 885 F.3d 318, 326 (5th Cir. 2018) (alteration omitted) (quoting Sw. Energy Prod. Co. v. Berry-Helfand, 411 S.W.3d 581, 598 (Tex. App—Tyler) rev'd on other grounds, 491 S.W.3d 699 (Tex. 2016)).
SPBS argues that the Proprietary Information is a trade secret, affording "independent economic value from not being general known or available." (Dkt. #3 at p. 20). SPBS further claims that it "competes with other companies such as Intermed in a tight market with a limited number of customers. . . ." (Dkt. #3 at p. 20). SPBS contends that it "gains an advantage in the market by keeping its data (including prices and customer contacts) secret from its competitorsthat are seeking to obtain business from the same customers." (Dkt. #3 at p. 20). Defendants denied that the Proprietary Information is a trade secret.
Under DTSA, a "trade secret" may consist of any formula, pattern, device, or compilation of information used in one's business, which the owner takes reasonable measures to keep secret, and which derives economic value from not being generally known by others in competition with the trade secret holder. 18 U.S.C. § 1839(3).
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