232 N.C. App. 559
N.C. Ct. App.2014Background
- Homer International manufactures flavor materials; McKoy worked May 2006–Oct 2012 as plant manager after helping set up a Durham plant.
- McKoy signed a Non-Competition Agreement (NCA) and Agreement Not to Disclose Trade Secrets (ANDTS) as conditions of employment.
- McKoy resigned Oct 8, 2012 and began working for Teawolf, LLC in New Jersey.
- Plaintiff filed on May 20, 2013 a complaint, TRO/PI/PI enjoining and expedited discovery; TRO and expedited discovery granted May 22, 2013; PI hearing in June 2013.
- Trial court enjoined disclosure of confidential information and trade secrets but denied the NCA portion of the injunction; Plaintiff appealed and Defendant cross-appealed on trade secrets injunction.
- The appellate court reviews the merits and standards for preliminary injunctions and the scope of covenants not to compete and trade secrets protections.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of the NCA via preliminary injunction | NCA can be enforced by PI; valid and enforceable | NCA too broad to enforce | NCA unenforceable for overbreadth; PI affirmed to deny NCA. |
| Trade secrets: sufficiency of pleading and likelihood of misappropriation | TSPA misappropriation shown; specific trade secrets identified | Only opportunity to misappropriate shown; not specific enough | TSPA misappropriation adequately supported; PI upheld for trade secrets. |
| Scope and specificity of the injunction against confidential information | Injunction appropriately tailored to protect trade secrets | Injunction too broad and nebulous | Injunction clarified as to trade-secret methods; broad aspects rejected; upheld. |
Key Cases Cited
- VisionAIR, Inc. v. James, 167 N.C. App. 504 (N.C. Ct. App. 2004) (preliminary injunction review is de novo; right to relief depends on likelihood of success and irreparable harm)
- A.E.P. Indus., Inc. v. McClure, 308 N.C. 393 (N.C. 1983) (primary inquiry for immediacy and merits in covenants not to compete)
- Okuma Am. Corp. v. Bowers, 181 N.C. App. 85 (N.C. Ct. App. 2007) (factors for reasonableness of time/territory; broad restraints may be unenforceable)
- Precision Walls, Inc. v. Servie, 152 N.C. App. 630 (N.C. Ct. App. 2002) (limits of covenants; focus on reasonable time/territory and bar on competitors)
- Washburn v. Yadkin Valley Bank & Trust Co., 190 N.C. App. 315 (N.C. Ct. App. 2008) (pleading trade secrets must identify with specificity; sweeping allegations insufficient)