Uhlig LLC v. Shirley
| Decision Date | 25 March 2011 |
| Docket Number | C.A. No. 6:08-cv-01208-JMC |
| Court | U.S. District Court — District of South Carolina |
| Parties | UHLIG LLC, et. al. Plaintiffs, v. JOHN ADAM SHIRLEY, et. al., Defendants. |
This matter is before the court on Intervener/Plaintiff Cox CustomMedia, Inc.'s ("CCM") motion for summary judgment on standing and on Defendant John Adam Shirley's ("Shirley") counter-claims against CCM. [Doc. 544-1].
Plaintiff Uhlig LLC ("Uhlig") is in the business of designing and creating newsletters for residents of multi-unit residential and apartment complexes and franchise businesses throughout the United States. [Doc. 544-3, at 2]. Uhlig creates as original works the design, templates, written content, and other collateral materials for its clients. [Doc. 544-3, at 2]. This client-specific material and information constitutes the intellectual property and confidential information and trade secrets which Uhlig has protected by copyright. [Doc. 544-3, at 2-4]. Uhlig is the leader in creating newsletters for the multi-family apartment industry and for senior residential communities. Id.
On February 29, 2008, CCM, and CCM's corporate parent, Cox Newspapers, Inc., entered into n Agreement for the Purchase and Sale of Assets (the "APA"), whereby Uhlig acquired from CCM ertain assets (personal, tangible and intangible), personal and business property, including all ntellectual property (including, but not limited to CCM's proprietary and confidential information, rade secrets, copyrights, copyrightable material, and trademarks), and all causes of action and claimsagainst third parties. [Doc. 544-3, at 3]. Pursuant to this APA, Uhlig acquired such information as the names, addresses, and contact information of each of its customers, pricing calculations, custom content and confidential information concerning CCM's clients, its original works of design and looks specific to its customers ("CustomMedia templates"), and the library and database of copyright and copyrightable original works of written content for newsletters created by CCM. [Doc. 544-3, at 3].
Prior to Uhlig and CCM entering into the Agreement, Shirley was employed by CCM as its Vice President and its highest paid full time employee. [Doc. 544-3, at 3]. CCM ceased all active operations but, pursuant to the Leased Employee Agreement ("LEA") entered into by these parties on the same date, CCM agreed to retain all employees, including Defendant Shirley, for a period of up to four months to permit the orderly transition of its accounts to Uhlig. [Doc. 544-3, at 3]. During this transition period, Shirley continued acting as the Vice President, with access to confidential information and trade secrets now belonging to Uhlig, including trade secret information regarding marketing, order negotiations, pricing, developing sales opportunities, and providing service to customers. [Doc. 544-3, at 3-4]. These parties attempted to negotiate with Shirley to serve as an independent contractor consultant for Uhlig in its newly-acquired business. [Doc. 544-3, at 5]. Thereafter, Shirley resigned effective March 10, 2008. [Doc. 544-3, at 6].
On April 3, 2008, Uhlig filed suit asserting causes of action for copyright infringement, misappropriation of trade secrets, conversion, passing off and trademark infringement, breach of fiduciary duty, misappropriation of corporate opportunity, tortious interference of contract, civil conspiracy, violations of the Computer Fraud and Abuse Act, 18 U.S.C § 1030(g), and the Digital Millennium Copyright Act, 17 U.S.C. § 1201(a). On April 7, 2008, Uhlig filed a Motion for Temporary Restraining Order and Preliminary Injunction seeking to enjoin Shirley, and others acting in concert with Defendants, from any unlawful use of Uhlig's trade secrets that Defendants allegedly misappropriated in violation of the South Carolina Trade Secrets Act. [Doc. 5].
CCM sought to intervene in this action for the limited purpose of ensuring that Uhlig hasstanding to seek effective relief for the alleged misconduct by Defendants regarding the NonCompetition and Non-Solicitation Agreement (the "Agreement") between CCM and Shirley. By order dated October 22, 2008 [Doc. 166], CCM has been allowed to intervene for the limited purpose of ensuring that Uhlig has standing to obtain the relief sought.
Federal Rule of Civil Procedure 56(a) states:
A party may move for summary judgment, identifying each claim or defense... on which summary judgment is sought. The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.
Fed. R. Civ. P. 56(a). Accordingly, to prevail on a motion for summary judgment, the movant must demonstrate that: (1) there is no genuine issue as to any material fact; and (2) that he is entitled to judgment as a matter of law. As to the first of these determinations, a fact is deemed "material" if proof of its existence or non-existence would affect disposition of the case under applicable law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). An issue of material fact is "genuine" if the evidence offered is such that a reasonable jury might return a verdict for the non-movant. Id. at 257. In determining whether a genuine issue has been raised, the court must construe all inferences and ambiguities against the movant and in favor of the non-moving party. United States v. Diebold, Inc., 369 U.S. 654, 655 (1962).
The party seeking summary judgment shoulders the initial burden of demonstrating to the district court that there is no genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the movant has made this threshold demonstration, the non-moving party, to survive the motion for summary judgment, may not rest on the allegations averred in his pleadings. Rather, the non-moving party must demonstrate that specific, material facts exist which give rise to a genuine issue. Id. at 324. Under this standard, the existence of a mere scintilla of evidence in support of the party's position is insufficient to withstand the summary judgment motion. Anderson, 477 U.S. at 252.Likewise, conclusory allegations or denials, without more, are insufficient to preclude the granting of the summary judgment motion. Ross v. Communications Satellite Corp., 759 F.2d 355, 365 (4th Cir. 1985). Anderson, 477 U.S. at 248.
Furthermore, Rule 56(e) provides in pertinent part:
If a party fails to properly support an assertion of fact or fails to properly address another party's assertion of fact as required by Rule 56(c), the court may:
(1) give an opportunity to properly support or address the fact;
(2) consider the fact undisputed for the purposes of the motion;
(3) grant summary judgment if the motion and supporting materials-including the facts considered undisputed-show that the movant is entitled to it; or
(4) issue any other appropriate order.
Fed. R. Civ. P. 56(e). Accordingly, when Rule 56(e) has shifted the burden of proof to the non-movant, he must produce the existence of every element essential to his action that he bears the burden of adducing at a trial on the merits.
"A plaintiff must have standing to institute an action." Sloan v. Greenville County, 356 S.C. 531, 547, 590 S.E.2d 338, 347 (Ct. App. 2003) (citing Joytime Distribs. & Amusement Co., Inc. v. State, 338 S.C. 634, 639, 528 S.E.2d 647, 649 (1999)). "To have standing, one must have a personal stake in the subject matter of the lawsuit." Id. ). Furthermore, "[t]o have standing... one must be a real party in interest. A real party in interest is one who has a real, material, or substantial interest in the subject matter of the action, as opposed to one who has only a nominal or technical interest in the action. Id. (citing CharlestonCounty Sch. Dist. v. Charleston County Election Comm'n, 336 S.C. 174, 181, 519 S.E.2d 567, 571 (1999)).
CCM argues that Uhlig has standing to enforce the Noncompetition Agreement. The general rule is that non-compete agreements are assignable in the context of the sale of a business. See e.g., Equifax Servs., Inc., v. Hitz, 905 F.2d 1355, 1361 (10th Cir. 1990) () (citing Restatement (Second) of Contracts § 317 cmt. d illustration 6 (1981)); Managed Health Care Assocs., Inc., v. Kethan, 209 F.3d 923, 930 (6th Cir. 2000) (); Reynolds and Reynolds Co. v. Tart, 955 F. Supp. 547, 556-57 (W.D.N.C. 1997) () (internal quotation marks omitted) (citing supporting cases from multiple jurisdictions).
Section 1.3(g) of the APA states that "all other contracts, agreements,... owned or acquired by [CCM] at or before the closing date and relating to [CCM's] business" are a part of the assets purchased. [Doc. 568-1, at 6-7, § 1.3(g)]. Furthermore, Shirley's employment contract states that his non-compete agreement "shall inure to the benefit of and be enforceable by [CCM], its successors, assigns and successors-in-interest...." [Doc. 544-4, at 4, § 8]. Therefore, this court finds that CCM assigned the Noncompetition Agreement to Uhlig and that Uhlig has...
To continue reading
Request your trial