The Walling Company LLC v. Kesterson, 8:25-cv-00294

Several employees (Scott Kesterson, Mary Kesterson, Curt Dowding, Andy Daly, Mitch McKnight) departed The Walling Company, joining a direct competitor, The Heat Exchanger Group, allegedly taking customers and some company data with them.
The Walling Company alleges these departures caused a near-total loss of its industrial pump and fire pump business and filed lawsuits in both state and federal court under various theories including breach of contract, trade secrets misappropriation, breach of duty of loyalty, and CFAA violations.
The Walling Company delayed seeking a preliminary injunction for 8 months after the alleged harms began, during which time it lost clients and any meaningful status quo had shifted.
The Court evaluated whether to grant a preliminary injunction, focusing on likelihood of success on the merits, irreparable harm, the balance of equities, and public interest under the Dataphase factors.
The Court found material differences in validity and scope among the defendants’ noncompete agreements, and significant deficiencies in The Walling Company's trade secrets claims, including lack of specificity and evidence of misappropriation or ongoing harm.
The Court ultimately denied the motion for preliminary injunction, finding insufficient likelihood of success and no irreparable harm due to past harm and delay. The case was referred to mediation.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Enforceability of noncompete agreements	Covenants valid/necessary to protect business interests	Automatic-extension provision invalid under Nebraska law	Scott Kesterson/Dowding's noncompetes unenforceable; Daly’s may be valid
Irreparable harm & timeliness of relief	Ongoing loss warrants emergency relief	Delay shows no real threat; harm is in past	Delay fatal; no irreparable harm shown, only past harm
Breach of duty of loyalty	Employees competed while employed, breaching duty	Any breach is over, duty ends with employment	Likelihood of past breach, but no forward harm for injunction
Misappropriation of trade secrets	Wide range of business info is trade secret, still being used	Most info not trade secret or not used post-employment	Only small subset may qualify; no evidence of current use/misappropriation
Computer Fraud & Abuse Act/Stored Comms. Act	Data retained/used post-termination is unauthorized access	Access was lawful at the time, no evidence of hacking/unauthorized	No likelihood of success; no irreparable harm
Tortious interference	Defendants interfered with valid contracts/expectancies	Actions were valid competition/not improper means	Success unlikely except possibly as derivative of valid noncompetes

Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109 (8th Cir. 1981) (sets multi-factor test for preliminary injunctions)
Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7 (2008) (preliminary injunction as extraordinary remedy, irreparable harm essential)
Ng v. Bd. of Regents of Univ. of Minnesota, 64 F.4th 992 (8th Cir. 2023) (delay in seeking injunction undermines irreparable harm)
Aon Consulting, Inc. v. Midlands Fin. Benefits, Inc., 748 N.W.2d 626 (Neb. 2008) (Nebraska’s standard for enforceable noncompetes)
Gaver v. Schneider’s O.K. Tire Co., 856 N.W.2d 121 (Neb. 2014) (restrictive covenants disfavored unless reasonable)
Dick v. Koski Pro. Grp., P.C., 950 N.W.2d 321 (Neb. 2020) (duty of loyalty ends with employment termination)