TMX Fin. Holdings, Inc. v. Drummond Fin. Servs., LLC

• Decision Date: 06 March 2017
• Docket Number: S16A1895
• Parties: TMX FINANCE HOLDINGS, INC. et al. v. DRUMMOND FINANCIAL SERVICES, LLC et al.
• Court: Georgia Supreme Court

797 S.E.2d 842

TMX FINANCE HOLDINGS, INC. et al.

v.DRUMMOND FINANCIAL SERVICES, LLC et al.

S16A1895

Supreme Court of Georgia.

Decided March 6, 2017

John P. MacNaughton, Shannon A. McNulty, Eric A Larson, Morris, Manning & Martin, LLP, 1600 Atlanta Financial Center, 3343 Peachtree Road, N.E., Atlanta, Georgia 30326, for Appellant.

Joseph Duane Wargo, Daniel H. Gaynor, Wargo & French LLP, 999 Peachtree Street, N.E. 26th Floor, Atlanta, Georgia 30309, for Appellee.

Blackwell, Justice.

Drummond Financial Services, LLC and TMX Finance Holdings, Inc. are competing automobile title loan companies based in Georgia, with TMX doing business as "TitleMax." In 2014, Drummond and several of its affiliated companies filed a lawsuit against TitleMax and several of its affiliated companies, alleging that TitleMax was "engaged in a nationwide campaign to systematically and illegally steal [Drummond's] customers." More specifically, Drummond alleged that TitleMax was compensating Drummond employees to refer customers to TitleMax, trespassing on Drummond property to gather information about Drummond customers, and using motor vehicle records to identify and solicit those customers in violation of the Driver's Privacy Protection Act of 1984.¹ Based on these allegations, Drummond asserted claims against TitleMax under the laws of Georgia and various other states for trespass, misappropriation of trade secrets, tortious interference with contracts, and unfair competition.

A few months later, Drummond filed a motion for a nationwide interlocutory injunction to prevent TitleMax from continuing to engage in practices that Drummond alleged were tortious and illegal. Following a hearing, the trial court granted a nationwide interlocutory injunction that prohibits TitleMax from "[e]ntering any of [Drummond's] [s]tores or the parking lots [or certain portions of the parking lots] of [Drummond's] [s]tores" to solicit Drummond customers or to record their license plate numbers or vehicle identification numbers (other than for purposes permitted by the Driver's Privacy Protection Act).² In addition, the injunction prohibits TitleMax from offering compensation to Drummond employees to refer Drummond customers to TitleMax. TitleMax appeals,³ and for the reasons that follow, we affirm in part and vacate in part, and we remand this case for further proceedings consistent with this opinion.

Whether an interlocutory injunction is warranted is a matter committed to the discretion of the trial court. See Holton v. Physician Oncology Svcs. , 292 Ga. 864, 866 (2), 742 S.E.2d 702 (2013). In exercising this discretion, a trial court generally must consider:

(1) whether there exists a substantial threat that a moving party will suffer irreparable injury if the injunction is not granted; (2) whether the threatened injury to the moving party outweighs the threat and harm that the injunction may do to the party being enjoined; (3) whether there is a substantial likelihood that the moving party will prevail on the merits at trial; and (4) whether granting the interlocutory injunction will not disserve the public interest.

Davis v. VCP South , 297 Ga. 616, 621-22, 774 S.E.2d 606 (2015) (citation omitted). And "[a]lthough one seeking interlocutory injunctive relief need not always prove all four of these factors, a trial court must keep in mind that an interlocutory injunction is an extraordinary remedy, and the power to grant it must be prudently and cautiously exercised." Jansen-Nichols v. Colonial Pipeline Co. , 295 Ga. 786, 787, 764 S.E.2d 361 (2014) (citations and punctuation omitted). We will not reverse the decision to grant an interlocutory injunction "unless the trial court made an error of law that contributed to the decision, there was no evidence on an element essential to relief, or the court manifestly abused its discretion." Nemchik v. Riggs , 300 Ga. 363, 792 S.E.2d 347 (2016) (citation omitted).

Here, TitleMax alleges that the trial court erred when it found that there was a substantial likelihood that Drummond would prevail on the merits at trial as to each of its claims and that, in any event, the trial court imposed greater restrictions than were warranted. We agree that Drummond is unlikely to be fully successful on the merits of all of its claims, and we agree as well that the record and findings of the trial court do not sustain the entire breadth of the nationwide injunction that the trial court entered.

1. First, TitleMax claims that Drummond is unlikely to succeed on the merits of its trespass claim, and to the extent that the injunction is based on this claim, the injunction is overly broad. In order to prevail on a trespass claim under Georgia law at trial, Drummond will have to show that it holds a sufficient interest in each of the properties from which it seeks to exclude TitleMax employees and agents. See Rabun County v. Mountain Creek Estates, LLC , 280 Ga. 855, 857 (1), 632 S.E.2d 140 (2006). Even if we may assume that Drummond has a sufficient ownership interest in its stores (by ownership or leasehold),⁴ we cannot indulge such an assumption about parking lots. The record is devoid of any evidence about Drummond's property rights in those parking lots, and it appears undisputed that Drummond does not have the right to exclude TitleMax from parking lots that Drummond shares with other businesses. Nevertheless, the injunction prohibits TitleMax from soliciting Drummond customers or collecting certain information about Drummond customers in specified portions of "shared" parking lots.⁵ To the extent that the nationwide injunction limits the circumstances in which TitleMax may go upon property from which Drummond has no right to exclude TitleMax agents and employees, the scope of the injunction is not warranted by a claim for trespass.

2. TitleMax also claims that Drummond failed to show a substantial likelihood that it would succeed on the merits of its claim for misappropriation of trade secrets. This claim is based on the allegation that TitleMax used information it gathered from motor vehicle records to identify Drummond's customers. But "only tangible lists of customers ... warrant protection as trade secrets" in Georgia. DeGiorgio v. Megabyte Intl. , 266 Ga. 539, 540 (3), 468 S.E.2d 367 (1996). Drummond has not claimed that TitleMax has taken a tangible list of Drummond's customers but rather that TitleMax has searched databases of motor vehicles to determine which vehicles have liens held by Drummond. Such actions may be unlawful under the Driver's Privacy Protection Act or otherwise,⁶ but they do not constitute a misappropriation of trade secrets in Georgia. See OCGA § 10-1-761 (4) ( " ‘[t]rade secret’ means ... a list of actual or potential customers ... which is not ... available to the public and ... [d]erives economic value ... from not being generally known to, and not being readily ascertainable by proper means by, other persons ...").⁷ As a result, to the extent that the nationwide injunction against TitleMax collecting information about Drummond customers in parking lots or using that information to search databases of motor vehicles is based on a finding that the identities of Drummond customers are trade secrets, the injunction cannot be sustained.⁸ See BEA Systems Inc. v. WebMethods Inc. , 265 Ga.App. 503, 510, 595 S.E.2d 87 (2004) ("injunction was overly broad and an abuse of discretion, because some or all of [the] information [which defendants were enjoined from disclosing] may not have had trade secret protection").

3. Finally, the portion of the injunction that prohibits TitleMax from offering compensation to Drummond employees who refer Drummond customers to TitleMax appears to be based on Drummond's claim for tortious interference with...