DTC Energy Grp., Inc. v. Hirschfeld, 912 F.3d 1263

Background

DTC Energy Group (staffing company) alleges former employees Adam Hirschfeld and Joseph Galban and competitor Ally used DTC trade secrets and client relationships to divert business to Ally.
Hirschfeld signed an employment agreement with confidentiality, non-solicitation, and non-interference covenants (in effect during employment and for one year after), but the covenants excluded resignations caused by a "change in the current equity ownership" of DTC.
After an ownership change in April 2017, Hirschfeld resigned in May 2017 citing that change, took a flash drive and a laptop with DTC resumes/Dropbox access, and began working for Ally the next day.
DTC sought a broad preliminary injunction to bar Ally from many business activities and to stop defendants from using DTC confidential information; the district court denied the motion and DTC appealed.
The district court found DTC showed probable irreparable harm only from Hirschfeld’s ongoing solicitation, but concluded the change-in-ownership clause relieved Hirschfeld of post‑resignation non‑solicit obligations and that other claims (trade secrets, unfair competition, prior misconduct) did not show a sufficient risk of future irreparable harm.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether DTC showed irreparable harm from defendants' past misconduct continuing now	DTC: past breaches continue to harm goodwill and competitive position and defendants still profit, so irreparable harm persists	Defendants: harms are past and monetary damages can be calculated; no ongoing misappropriation shown	Court: DTC failed to show sufficient probability of future irreparable harm from past misconduct; denial affirmed
Whether defendants currently possess DTC trade secrets warranting injunction under DTSA/CUTSA	DTC: defendants retained/access to DTC resumes/Dropbox and may still use/receive them	Defendants: materials were turned over to a forensic vendor; access was lost; continued possession is speculative	Court: record contains no evidence defendants currently possess trade secrets; injunction based on trade-secret claims not warranted
Whether Hirschfeld’s post‑resignation solicitation breached his employment agreement (nonsolicit clause)	DTC: Hirschfeld’s solicitation of former clients violates the nonsolicit covenant and threatens irreparable harm	Hirschfeld: change-in-ownership exception was triggered when ownership changed, so post‑resignation covenant does not apply	Court: change-in-ownership clause was triggered; DTC conceded as much; therefore likelihood of success on breach claim is lacking
Whether Colorado’s prior‑breach (or equitable estoppel) doctrine prevents Hirschfeld invoking the ownership-change exception	DTC: Hirschfeld breached first, so he cannot claim benefit of contract clause	Defendants: clause is unambiguous and enforceable; prior‑breach doctrine inapplicable as a sword to create liability	Court: prior‑breach doctrine not applicable here; DTC may not use it to rewrite clear contract terms (equitable‑estoppel argument not addressed on appeal)

Key Cases Cited

Schrier v. Univ. of Colo., 427 F.3d 1253 (10th Cir. 2005) (preliminary injunction standard and extraordinary nature of injunction)
First W. Capital Mgmt. Co. v. Malamed, 874 F.3d 1136 (10th Cir. 2017) (irreparable‑harm requirement is primary; statutory presumption limits)
Dominion Video Satellite, Inc. v. Echostar Satellite Corp., 356 F.3d 1256 (10th Cir. 2004) (factors for irreparable harm include difficulty of calculating damages and loss of goodwill)
Winter v. Nat. Res. Def. Council, 555 U.S. 7 (2008) (standard for preliminary injunctions)
Greater Yellowstone Coal. v. Flowers, 321 F.3d 1250 (10th Cir. 2003) (injunction may be required to prevent judicial relief from becoming futile when future acts would irreversibly cause harm)
Foodcomm Int'l v. Barry, 328 F.3d 300 (7th Cir. 2003) (injunction upheld where former employees’ past breaches produced continuing irreparable harm)
W. Distrib. Co. v. Diodosio, 841 P.2d 1053 (Colo. 1992) (breach of contract requires violation of a contractual term)
Coors v. Sec. Life of Denver Ins. Co., 112 P.3d 59 (Colo. 2005) (prior‑breach equitable doctrine explained)