572 F.Supp.3d 375
W.D. Ky.2021Background
- Cabrera, hired by Material Handling Systems, Inc. (MHS) in March 2019 as a high‑paid mechanical superintendent, signed a written Confidentiality, Proprietary Rights, and Restrictive Covenant Agreement that included a two‑year post‑employment noncompete, nonsolicitation, and nondisclosure covenant and a Kentucky forum‑selection/personal‑jurisdiction clause.
- While still employed, Cabrera co‑founded Precise Install Solutions (Texas), solicited clients (including Honeywell/Amazon projects), and recruited multiple MHS workers to join Precise Install.
- Forensic review showed Cabrera (and an associate, Mireles) accessed and forwarded MHS bid/design/scheduling documents from MHS systems and copied files to external media and personal email/iCloud.
- MHS obtained a TRO and sought a preliminary injunction alleging breach of the restrictive covenant, misappropriation of trade secrets, fiduciary‑duty breaches, and unfair competition; an evidentiary hearing was held.
- The court found Cabrera likely waived jurisdictional objections via the forum clause and had sufficient Kentucky contacts; it concluded MHS showed a strong likelihood of success on enforceability and breach (noncompete, nonsolicit, nondisclosure/trade secrets), irreparable harm, and public interest and therefore granted a preliminary injunction (bond set at $500,000).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Personal jurisdiction | Forum‑selection clause and Kentucky contacts justify jurisdiction over Cabrera | Cabrera is a Texas resident with no Kentucky work sites; dismissal warranted | Forum clause valid and waived objection; minimum contacts also support jurisdiction over Cabrera; Precise Install jurisdiction deferred but injunctive relief binds it if in active concert with Cabrera |
| Contract enforceability (mutual assent/consideration) | Restrictive covenant is part of the employment package; job offer/continued employment is adequate consideration | Covenant signed separate from (or after) employment; MHS Holdings named but did not employ Cabrera; lack of consideration and mutual assent | Agreement enforceable: offer was contingent on signing; employment (and continued employment/training) provides consideration; subsidiaries language binds MHS |
| Procedural unconscionability / language barrier | Cabrera lacked time/Spanish translation and was pressured to sign; did not understand English | Cabrera had opportunity to review, received documents from bilingual recruiter, communicated in English in work emails/training | No evidence of fraud or coercion; signer presumed to know contents; language‑barrier defense fails |
| Breach of restrictive covenant (noncompete & nonsolicit) | Precise Install is a staffing business not a competitor; Cabrera didn’t meaningfully solicit or compete | Cabrera marketed Precise Install as an installer, bid on Amazon projects, recruited MHS employees and paid higher wages | Court finds likely breach: Precise Install competed for conveyor‑installation work and Cabrera solicited MHS employees; nonsolicit breached by text messages and overlapping payrolls |
| Nondisclosure / trade secrets | Documents were not marked confidential; materials evolve and are not trade secrets | Forwarding company bid/pricing, best practices, checklists to personal accounts and USBs was unauthorized | Court finds likely misappropriation of confidential/trade‑secret materials in violation of the NDA and KUTSA |
| Preliminary injunction balance (irreparable harm, harms, public interest) | MHS faces irreparable loss of goodwill and unfair competition; public interest favors enforcement | Injunction would harm Cabrera/family by banning his industry work | Court: irreparable harm shown; harm to Cabrera insufficient to outweigh employer interest; public interest favors enforcing valid covenants; PI granted with $500,000 bond |
Key Cases Cited
- M/S Bremen v. Zapata Off‑Shore Co., 407 U.S. 1 (U.S. 1972) (forum‑selection clauses are prima facie valid)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (U.S. 1985) (minimum contacts from contractual relationship support jurisdiction)
- Pittock v. Otis Elevator Co., 8 F.3d 325 (6th Cir. 1993) (apply state long‑arm statute for personal jurisdiction in diversity cases)
- Power Investments, LLC v. SL EC, LLC, 927 F.3d 914 (6th Cir. 2019) (contracts creating continuing relationships can support jurisdiction)
- Estate of Thomson v. Toyota Motor Corp. Worldwide, 545 F.3d 357 (6th Cir. 2008) (alter‑ego theory can extend jurisdiction to related corporations)
- Inter‑Tel Techs., Inc. v. Linn Station Props., 360 S.W.3d 152 (Ky. 2012) (Kentucky alter‑ego/unity‑of‑interest test)
- Certified Restoration Dry Cleaning Network v. Tenke Corp., 511 F.3d 535 (6th Cir. 2007) (preliminary injunction standards; less formal evidence allowed)
- Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7 (U.S. 2008) (preliminary injunction requires likelihood of success and irreparable harm)
- Higdon Food Servs. v. Walker, 641 S.W.2d 750 (Ky. 1982) (employment constitutes consideration for noncompete)
- Central Adjustment Bureau v. Ingram Assocs., Inc., 622 S.W.2d 681 (Ky. Ct. App. 1981) (continued employment or specialized training can supply consideration)
- Charles T. Creech, Inc. v. Brown, 433 S.W.3d 345 (Ky. 2014) (specialized training can be consideration for restrictive covenants)
- Hathaway v. Eckerle, 336 S.W.3d 83 (Ky. 2011) (one who signs a contract is presumed to know its contents)
- Lareau v. O'Nan, 355 S.W.2d 679 (Ky. 1962) (Kentucky favors enforcement of reasonable noncompetes)
- Basicomputer Corp. v. Scott, 973 F.2d 507 (6th Cir. 1992) (loss of customer goodwill can be irreparable harm)