Sunbelt Rentals, Inc. v. Head & Engquist Equipment, L.L.C.
| Decision Date | 27 March 2016 |
| Docket Number | 00-CVS-10358 |
| Citation | 2002 NCBC 4 |
| Court | Superior Court of North Carolina |
| Parties | SUNBELT RENTALS, INC., a North Carolina corporation, Plaintiff, v. HEAD & ENGQUIST EQUIPMENT, L.L.C., d/b/a H&E HI-LIFT, ROBERT HEPLER, DOUGLAS KLINE, MICHAEL QUINN, GREGG L. CHRISTENSEN, PATRICK C. MULDOON, MICHELE U. DOUGHERTY and BRIAN W. PEARSALL, Defendants. |
Parker, Poe, Adams & Bernstein, L.L.P., by William L. Rikard, Jr. and Eric D. Welsh for plaintiff.
Helms Mulliss & Wicker, P.L.L.C., by Irving M. Brenner for defendants.
{1} This case arises out of an employer's allegations of unfair competitive activity by former officers and managers who have joined the employ of a competing business. The employer, Plaintiff Sunbelt Rentals, Inc. ("Sunbelt"), has brought this action against defendants and the company for which they now work, claiming that they have breached their fiduciary duties, aided and abetted the breach of fiduciary duties, tortiously interfered with prospective relations, violated the North Carolina Trade Secrets Act, violated the North Carolina Unfair Trade Practices Act, and committed wrongful acts pursuant to a conspiracy. This matter is currently before the court on defendants' motion for summary judgment pursuant to Rule 56 of the North Carolina Rules of Civil Procedure. For the reasons set forth below, this court will grant defendants' motion in part and deny defendants' motion in part.
{2} The allegations in this dispute require the court to consider closely two primary factual components of the case: first, the nature of the individual defendants' employment-both with Plaintiff Sunbelt (including its predecessor in interest) and subsequently with defendant company Head & Engquist Equipment ("H&E")-and, second, the circumstances surrounding the defendants' leaving their old jobs for their new ones. The essential facts relevant to this examination, considered in the light most favorable to plaintiff, are set forth below. Additional facts will be raised and considered in succeeding sections of this opinion, as they are relevant to the court's examination of the particular claims at issue in this motion.
{3} Sunbelt is a North Carolina corporation that rents construction and industrial equipment. It does business throughout the United States, including Mecklenburg County, North Carolina, where it has a place of business. In April 2000, Sunbelt announced its plans to purchase BE T Plant Services, Inc. ("Plant Services"), a Georgia corporation.[1] Included in the purchase was BPS Equipment Rental and Sales, a division of Plant Services that had been in the business of renting, selling and installing construction and industrial equipment since 1939. Prior to the sale of Plant Services, BPS was headquartered in Jacksonville, Florida, and operated 24 branches, located throughout the Southeast and south-central United States. Less than two months later, on June 1, 2000, the purchase of Plant Services was consummated.
{4} Defendant H&E is a Louisiana corporation doing business in various states throughout the United States, including North Carolina, where one of its divisions has a branch office located in Mecklenburg County. Defendant H& E Hi-Lift ("Hi-Lift"), [2] a division of H&E, is also a Louisiana corporation that conducts business in North Carolina and other states in the Southeast.
{5} Plaintiff has also named a number of individuals in this suit who had previously worked for Plant Services or Sunbelt before entering the employ of H&E. Defendant Robert Hepler, a citizen and resident of Florida, served as president of BPS and as director of Plant Services from 1992 until his employment ended on December 14, 1999. After leaving his position at BPS, Mr. Hepler became employed as an officer of Hi-Lift. Plaintiff also contends that Mr. Hepler has served H&E and Hi-Lift as a director. Defendants deny this assertion.
{6} Defendant Douglas Kline is also a citizen and resident of Florida. From 1992 until the end of his employment on December 14, 1999, Mr. Kline served as vice president of finance at BPS and as director and assistant secretary of Plant Services. When his employment with BPS ended, Mr. Kline joined Hi-Lift as an officer. As with Mr. Hepler, plaintiff contends that Mr. Kline served H&E and Hi-Lift as a director-an assertion defendants also deny.
{7} Defendant Michael Quinn is a citizen and resident of Georgia. From 1979 until January 5, 2000, Mr. Quinn was product manager of BPS and its predecessor companies. After leaving his employment with BPS, Mr. Quinn became employed as vice president of Hi-Lift's Eastern Region.
{8} Defendant Gregg L. Christensen is a citizen and resident of Texas. Mr. Christensen was director of operations, Western Division at BPS from 1992 until he left that position on January 14, 2000. After leaving BPS, Mr. Christensen became employed at H&E as vice president of Hi-Lift's Western Division.
{9} Defendant Michele U. Dougherty is a citizen and resident of North Carolina. From 1989 until June 6, 2000, Ms. Dougherty was employed at BPS's Charlotte, North Carolina office. Plaintiff asserts that Ms. Dougherty served as branch administrator while working for BPS in Charlotte. After leaving BPS, Ms. Dougherty became the branch administrator of Hi-Lift's Charlotte operations.
{10} Defendant Brian W. Pearsall, also a citizen and resident of North Carolina, was the branch manager for BPS's Charlotte, North Carolina office from 1987 until his resignation on June 5, 2000. Upon leaving BPS, Mr. Pearsall became the branch manager of Hi-Lift's Charlotte operations.
{11} Defendant Patrick C. Muldoon, a citizen and resident of North Carolina, served as BPS's service manager at its Charlotte branch from 1989 until his resignation in late May 2000. After leaving his employment at BPS, Mr. Muldoon became employed as service manager of H&E's Charlotte office.
{12} Immediately following Sunbelt's purchase of BPS, several management level BPS employees, including the named defendants, and many more lower level employees left their jobs with the company and took positions in H&E's newly created Hi-Lift division. The basis of each of plaintiff's claims are that this substantial shift of employees from BPS to H&E was part of an "unlawful plan" undertaken by defendants to raid BPS of its employees, customers and trade secrets.
{13} As alleged by plaintiff, the defendants implemented this plan during their employment with BPS by misappropriating BPS trade secrets and confidential information and using their relationships with BPS customers and other BPS employees to the competitive disadvantage of BPS. According to plaintiff, this plan was born out of a desire by Hepler and Kline to create an aerial work platform ("AWP") business to be owned by them. In August 1999, they developed a business plan for the new enterprise that described, among other things, the locations where the company would do business, details as to the levels of employee compensation required, and details about the type and amount of equipment that should be maintained at each location.
{14} Plaintiff claims that Hepler and Kline began implementing their plan when, in late 1999, they met on at least two occasions with owners and managers of H&E. The substance and purpose of those meetings, however, is disputed by the parties: plaintiff speculates, but offers no proof, that these meetings included discussions as to how H&E would "raid" BPS/Sunbelt of its customers, employees, and other confidential and proprietary information as H&E expanded its Hi-Lift division into BPS/Sunbelt markets; defendants testified these meetings were concerned solely with the prospective employment of Hepler and Kline at H&E and that no such comprehensive plan or "raid" was discussed.
{15} Following Hepler and Kline's departure from H&E on December 14, 1999, plaintiff claims the raid of BPS/Sunbelt employees began in earnest. As characterized by plaintiff, the alleged plan took the form of a "pyramid pattern." Hepler and Kline recruited Defendants Quinn and Christensen from the BPS/Sunbelt Dallas, Texas office. Plaintiff claims that Quinn and Christensen then began recruiting other BPS/Sunbelt employees to join H&E-doing so in some cases before resigning themselves from BPS/Sunbelt. Subsequently, in each location, the individual branch managers were recruited to H&E, who, in turn, also began recruiting BPS/Sunbelt employees for H&E while still employed themselves for BPS/Sunbelt. Defendants admit that at least 69 former employees of BPS/Sunbelt have joined H&E since December 1999. Defendants deny, however, that they were recruited as part of an unlawful plan to raid plaintiff of its key human resources, suggesting instead that employees left their jobs with plaintiff because of problems internal to BPS/Sunbelt's business.
{16} According to plaintiff, Defendant H&E used BPS/Sunbelt employees to immediately convert BPS/Sunbelt customers to H&E. Plaintiff emphasizes that BPS/Sunbelt sales representatives who had been recruited by H&E began calling on BPS/Sunbelt customers on behalf of H&E before they had officially left their jobs with plaintiff. Other solicitations of BPS/Sunbelt customers by former BPS/Sunbelt employees occurred within days or hours of those employees' departure to H&E. According to plaintiff, these solicitations of BPS/Sunbelt customers could only have been accomplished by the use of its confidential and proprietary information. Plaintiff alleges that its former employees took customer records with them to H&E and the BPS/Sunbelt pricing and customer information was used to solicit customers to H&E.
{17} Defendants admit that plaintiff's customers were actively solicited after H&E established and expanded its hi-lift division into BPS/Sunbelt markets. Defendants deny, however, that any information about BPS/Sunbelt's customers or other...
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