646 F.Supp.3d 897
E.D. Mich.2022Background:
- MDI provides point-of-purchase (POP) promotions, design, production, logistics, installation and related marketing services to national/international retail and restaurant clients.
- Brianna Shaw worked for MDI as a POP Key Account Executive from July 2018 until July 1, 2022 and signed a Non-Competition Agreement prohibiting, for one year post-termination, working for any “Competing Entity” in the Territory (U.S. and foreign countries where MDI does business), soliciting MDI customers/employees, or disclosing Confidential Information.
- After resigning, Shaw took a position with Miller Zell; parties dispute whether Miller Zell competes with MDI, though evidence showed Miller Zell provides design, print, procurement and installation services that can include POP.
- Shaw retained spreadsheets and a USB drive containing customer contact information and provided a recruiter a top-ten customer list that recruiter passed to Miller Zell; she denied using or sharing MDI trade secrets and said some customer data is publicly available.
- MDI sent a demand letter; sued to enforce the non-compete and obtain injunctive relief after Shaw’s removal to federal court. On December 14, 2022 the Court granted a preliminary injunction enjoining Shaw from competing (including employment with Miller Zell) for one year, ordering return/inspection of MDI materials, and waiving bond.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Enforceability of non-compete | Agreement is reasonable in scope, duration (1 year), geography (national/international), and protects legitimate business interests | Agreement disfavored as restraint on trade; argues overbreadth | Court: Agreement enforceable under Michigan law as reasonable and tailored to MDI’s interests |
| Whether Miller Zell is a Competing Entity / breach by employment | Miller Zell provides overlapping POP-related services and competes for the same clients; Shaw’s employment therefore breaches the Agreement | Miller Zell sells different services (strategy, environmental design, fixtures); does not manufacture POP in-house; different industry codes | Court: Evidence showed Miller Zell procures/provides POP and competes with MDI; Shaw’s employment likely breaches the Agreement |
| Retention/disclosure of Confidential Information | Shaw retained customer lists, USB drive, OneNote and gave top-ten customers to a recruiter — constituting impermissible retention/disclosure | Use of personal accounts/devices was common and permitted; data is publicly available and not confidential; no misuse | Court: Customer lists and retained materials fall within Agreement’s Confidential Information; Shaw likely breached by retaining/disclosing those materials |
| Preliminary injunction factors (irreparable harm, equities, public interest, bond) | Irreparable harm from loss of customer goodwill and unfair competition; equities and public interest favor enforcing contracts; Agreement waives bond | Argues no irreparable harm because Shaw isn’t selling same products, hasn’t contacted clients, and lacks trade secrets; hardship to Shaw and family | Court: All four Winter factors favor MDI — irreparable harm, balance of equities, and public interest support injunction; bond waived per contract |
Key Cases Cited
- Winter v. Natural Resources Defense Council, 555 U.S. 7 (U.S. 2008) (sets four-factor standard for preliminary injunctions)
- Certified Restoration Dry Cleaning Network, L.L.C. v. Tenke Corp., 511 F.3d 535 (6th Cir. 2007) (framework for preliminary injunction analysis and protecting customer lists/confidential information)
- Basicomputer Corp. v. Scott, 973 F.2d 507 (6th Cir. 1992) (loss of customer goodwill can constitute irreparable harm)
- Coates v. Bastian Bros., Inc., 276 Mich. App. 498 (Mich. Ct. App. 2007) (party seeking to enforce noncompete must show reasonableness)
- St. Clair Medical, P.C. v. Borgiel, 270 Mich. App. 260 (Mich. Ct. App. 2006) (scope of restrictive covenant must protect against unfair competitive advantage without barring use of general skill)
- DeFrain v. State Farm Mutual Automobile Insurance Co., 491 Mich. 359 (Mich. 2012) (contracts given their ordinary and plain meaning)
- Moltan Co. v. Eagle–Picher Industries, 55 F.3d 1171 (6th Cir. 1995) (district court discretion to require or waive bond under Rule 65(c))
- Kelly Servs., Inc. v. Noretto, 495 F. Supp. 2d 645 (E.D. Mich. 2007) (one-year duration for non-compete reasonable in Michigan)