TSG Finishing, LLC v Bollinger 

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NO. COA14-623 NORTH CAROLINA COURT OF APPEALS Filed: 31 December 2014 TSG FINISHING, LLC, Plaintiff, v. Catawba County No. 14 CVS 104 KEITH BOLLINGER, Defendant. Appeal by plaintiff from order entered 20 February 2014 by Judge Calvin E. Murphy in Catawba County Superior Court. Heard in the Court of Appeals 3 November 2014. Law Offices of Matthew K. Rogers, Rogers, for plaintiff-appellant. PLLC, by Matthew K. Patrick, Harper & Dixon, LLP, by Michael P. Thomas, for defendant-appellee. HUNTER, Robert C., Judge. TSG Finishing, LLC (“plaintiff” or “TSG”) appeals from an order denying its motion for a preliminary injunction aimed at preventing its former employee, Keith Bollinger (“defendant”), from breaching a non-competition and confidentiality agreement (“the non-compete agreement”) and misappropriating TSG’s trade secrets. On appeal, plaintiff contends that the trial court erred denying by its motion for a preliminary injunction -2because: (1) it has demonstrated a likelihood of success on the merits of its claims for breach of contract and misappropriation of trade secrets; and (2) it would suffer irreparable harm without issuance of the preliminary injunction. After careful review, we reverse the trial court’s order and remand with instructions to issue the preliminary injunction. Background TSG is in the business of fabric finishing. plants in Catawba County, North Carolina. It has three Rather than manufacturing fabrics, TSG applies chemical coatings to achieve whichever result is desired by the customer, such as coloring, stiffening, deodorizing, and abrasion resistance. Defendant began working in the field of fabric finishing for Geltman Corporation after graduating from high school in 1982. He has no formal education beyond high school. Incorporated (“TSG, Inc.”)1 acquired Geltman defendant stayed on to work for TSG, Inc. in 1992, TSG, and By the late 1990’s, defendant was promoted to Quality Control Manager. Defendant was responsible for assessing a customer’s finishing needs and developing a finishing protocol for that 1 As will be discussed subsidiary of TSG, Inc. below, plaintiff is a wholly owned -3customer. Defendant also helped in the creation of a “style data card” for each customer. The style data cards contained information on each step of the finishing process, such as: (1) the chemical finish compound, 70 percent of which was proprietary to TSG; (2) “cup weight” density; (3) needle punch technique; (4) type of machine needed for the needle punch technique; (5) speed of needle punch; (6) types of needles used; (7) needle punch depths; (8) method of compound application; (9) speed of compound application; (10) blade size; (11) fabric tension; and (12) temperature and type of drying required. Defendant testified during deposition that some of these factors required trial and error to achieve a customer’s desired result. For example, on one of the style data cards used to explain defendant’s work-related duties during the deposition, defendant had marked a number of changes to the various factors listed and signed his initials to the changes. that he changed the data entered by the He testified customer because subsequent testing revealed different and more efficient methods to achieve the result. He also testified that the results of the trials he conducted and the knowledge he gained regarding how to achieve these results were not known outside of TSG. Michael Goldman, the Director of Operations at TSG, filed an -4affidavit in which he asserted that some of the customer projects that defendant worked on required over a year’s worth of trial and error to achieve a customer’s desired result. TSG expends great effort to keep its customer and finishing information confidential. Specifically, it uses a code system in its communications with customers that allows the customer to identify the type of finish it wants, but does not reveal the chemicals or processes involved in creating that finish. TSG has its confidentiality customers. agreements in place with many of Third parties must sign confidentiality agreements and receive a temporary identification badge when visiting TSG’s facilities. additional TSG’s passwords computers being are required password to protected, access the with company’s production information. In 2007, TSG, Inc. and defendant disclosure and non-compete agreement. entered into a non- In exchange for an annual increase in compensation of $1,300.00 and a $3,500.00 signing bonus, defendant agreed not to disclose TSG, Inc.’s confidential or proprietary trade secrets and further assented to employment restrictions after his tenure at the company ended. TSG, Inc. filed for bankruptcy in 2009. By a plan approved by the United States Bankruptcy Court on 1 May 2011, TSG, Inc. -5transferred its interests to plaintiff, a wholly owned operating subsidy of TSG, Inc., which remained in operation. According to defendant, every aspect of his day-to-day job remained the same after bankruptcy reorganization. In July 2013, defendant and a direct competitor of TSG, American Custom Finishing, LLC (“ACF”), began negotiations regarding defendant’s potential to leave TSG and work for ACF. According to TSG, defendant resigned from his position on 21 November 2013 and announced that he was leaving to become plant manager for ACF at a plant five miles away from TSG. Defendant claims that he gave TSG two weeks’ notice on 21 November 2013 but was terminated immediately and escorted off of the premises. Defendant began working for ACF the following Monday, on 25 November 2013. During his deposition, defendant testified that TSG and ACF shared certain customers, and that defendant is responsible for performing similar customer evaluations for ACF as he did at TSG. TSG alleging filed suit claims for against breach defendant of on contract, 16 January 2014, misappropriation trade secrets, and unfair and deceptive practices. of TSG also moved for a preliminary injunction to prevent defendant from breaching the non-compete and misappropriating TSG’s trade -6secrets. A confidential hearing was held on plaintiff’s motion, and by order entered 20 February 2014, the trial court denied the motion for preliminary injunction. Plaintiff filed timely notice of appeal. Grounds for Appellate Review We must plaintiff’s injunctions first appeal. are address Orders the granting “interlocutory immediately reviewable. interlocutory or and denying thus nature of preliminary generally not An appeal may be proper, however, in cases, including those involving trade secrets and non-compete agreements, where the denial of the injunction deprives the appellant of a substantial right which he would lose absent review prior to final determination.” VisionAIR, Inc. v. James, 167 N.C. App. 504, 507, 606 S.E.2d 359, 361 (2004) (citations and internal quotation marks omitted). [W]here time is of the essence, the appellate process is not the procedural mechanism best suited for resolving the dispute. The parties would be better advised to seek a final determination on the merits at the earliest possible time. Nevertheless, [where a] case presents an important question affecting the respective rights of employers and employees who choose to execute agreements involving covenants not to compete, we have determined to address the issues. -7A.E.P. Indus., Inc. v. McClure, 308 N.C. 393, 401, 302 S.E.2d 754, 759 (1983). Citing the rule in A.E.P. Indus., Inc., this Court has held that “the same reasoning applies to agreements between an employer and employee regarding protection of the employer’s alleged trade secrets.” Horner Intern. Co. v. McKoy, __ N.C. App. __, __, 754 S.E.2d 852, 855 (2014). Accordingly, because both a non-compete and the potential misappropriation of trade secrets are implicated by this case, we conclude that plaintiff has succeeded in demonstrating how a substantial right may be lost without immediate appellate review; thus, we will reach the merits of the appeal. Discussion I. Misappropriation of Trade Secrets Plaintiff first argues that the trial court erred by concluding that it has not demonstrated a likelihood of success on the merits of its claim for trade secret misappropriation. After careful review, we agree. As a general rule, a preliminary injunction is an extraordinary measure taken by a court to preserve the status quo of the parties during litigation. It will be issued only (1) if a plaintiff is able to show likelihood of success on the merits of his case and (2) if a plaintiff is likely to sustain irreparable loss unless the injunction is issued, or if, in the opinion of the Court, issuance is necessary for the -8protection of a plaintiff’s the course of litigation. A.E.P. Indus., Inc., 308 N.C. at rights 401, 302 during S.E.2d (citations and internal quotation marks omitted). of review from a denial of a preliminary at 759-60 The standard injunction is “essentially de novo,” VisionAIR, Inc., 167 N.C. App. at 507, 606 S.E.2d at 362, wherein this Court is not bound by the factual findings of the trial court, but may review and weigh the evidence and find facts for itself, A.E.P. Indus., Inc., 308 N.C. at 402, 302 S.E.2d at 760. court’s ruling on a motion “Nevertheless[,] a trial for preliminary injunction is presumed to be correct, and the party challenging the ruling bears the burden of showing it was erroneous.” VisionAIR, Inc., 167 N.C. App. at 507, 606 S.E.2d at 362. The private Trade cause Secrets of Protection action where Act a (“TSPA”) plaintiff allows can for prove a the “acquisition, disclosure, or use of a trade secret of another without express or implied authority or consent, unless such trade secret was arrived at by independent development, reverse engineering, or was obtained from another person with a right to disclose the trade secret.” N.C. Gen. Stat. §§ 66-152(1), -153 (2013). “Trade secret” means business or technical -9information, including but not limited to a formula, pattern, program, device, compilation of information, method, technique, or process that: a. Derives independent actual or potential commercial value from not being generally known or readily ascertainable through independent development or reverse engineering by persons who can obtain economic value from its disclosure or use; and b. Is the subject of reasonable under the maintain its secrecy. N.C. Gen. Stat. § 66-152(3) efforts that circumstances (2013). To are to determine what information should be treated as a trade secret for the purposes of protection under the TSPA, the Court should consider the following factors: (1) the extent to which the information is known outside the business; (2) the extent employees and business; to which it is others involved known to in the (3) the extent of measures taken to guard secrecy of the information; (4) the value of the information to business and its competitors; (5) the amount of effort or money expended in developing the information; and (6) the ease or difficulty with which the information could properly be acquired or duplicated by others. -10Area Landscaping, L.L.C. v. Glaxo-Wellcome, Inc., 160 N.C. App. 520, 525, 586 S.E.2d 507, 511 (2003). “[A]ctual or threatened misappropriation of a trade secret may be preliminarily enjoined during the pendency of the action and shall be permanently misappropriation[.]” enjoined upon judgment finding N.C. Gen. Stat. § 66-154(a) (2013). Misappropriation of a trade secret is prima facie established by the introduction of substantial evidence that the person against whom relief is sought both: (1) Knows or should have known of the trade secret; and (2) Has had a specific opportunity to acquire it for disclosure or use or has acquired, disclosed, or used it without the express or implied consent or authority of the owner. N.C. Gen. Stat. § 66-155 (2013). Here, the trial court determined that plaintiff failed to demonstrate likelihood misappropriation of of trade success secrets on claim the for merits the of its following reasons: (1) plaintiff asserted that its finishing process “as a whole” was the trade secret for which it sought protection, and under the holding of Analog Devices, Inc. v. Michalski, 157 N.C. App. 462, 468, 579 S.E.2d 449, 453 (2003), general processes are too vague to receive TSPA protection; and (2) defendant’s -11familiarity with customer preferences was “more akin to general knowledge and skill acquired on the job than any trade secret maintained by [p]laintiff.” For the following reasons, we disagree with the trial court’s conclusions. First, contrary to the trial court’s assessment of the preliminary injunction hearing, plaintiff did not “continually assert” that it was the “combination of [the] components,” or the “process Although as TSG’s a whole,” Chief for which Executive it Officer sought protection. Jack Rosenstein (“Rosenstein”) did say that the entire equation of processes was a trade secret in and of itself, he also testified that the particular steps in the process were also trade secrets. As an example, Rosenstein highlighted the needle punch technique on a style data card that defendant had worked on during his time at TSG. The customer initially requested that the fabric be put through the needle punch machine one time at a specific setting. Through trial and error, defendant discovered that the customer’s desired result could not be accomplished by running the needle punch machine one time at this setting, so he changed the process after experimenting with varying settings. Rosenstein testified the needle punch research for this client, in addition to the similar types of experimentation done to -12various processes secrets. throughout the finish equation, were trade Specifically, he testified as follows: [ROSENSTEIN]: That’s all part of the trade secrets. That’s all part of what [defendant], in his own mind when he’s looking at a new fabric, needs to determine – which Latex should be used, what density needs to be used, whether it needs to be needle punched or not and then within that which – which needle punch, what depth of penetration – exactly what the parameters are. Then he needs to determine what range it needs to go on, what speed needs to be run, what the finish is. . . . Q: And so each one of those variables impacts the other variables in the equation? [ROSENSTEIN]: Yes. Therefore, it was not just the process as a whole, but the specific knowledge defendant gained as to each discrete step in the process, that TSG sought to protect. Based on Analog Devices, Inc., the trial court concluded that plaintiff had failed to “put forward enough facts to support trade secret protection over the process as a whole or any particular component such that the [trial court] would be justified in granting the injunction sought.” However, the Analog Devices, Inc. Court upheld the denial of a preliminary injunction in part defendant’s former and because new the differences employers “render[ed] between the the alleged -13trade secrets largely non-transferable.” Analog Devices, Inc., 157 N.C. App. at 467, 579 S.E.2d at 453. Furthermore, the Court determined carry that the plaintiff did not its burden of producing evidence specifically identifying the trade secrets it sought to protect. Id. at 469, 579 S.E.2d at 454. The evidence before the Court showed that some of the plaintiff’s production techniques were “easily and readily reverse engineered,” while others were “either generally known in the industry, are process dependent so as to preclude misappropriation, or are readily ascertainable by reverse engineering.” at 454. Id. at 470, 579 S.E.2d Finally, regarding the processes used by the plaintiff, the Court found that there was substantial differences between the products of experimentation the and two companies development of that new would ways to “require new effectively identify efforts that will lead to successful development.” Id. Thus, the the Court affirmed preliminary injunction. the trial court’s denial of Id. at 472, 579 S.E.2d at 455. The facts of this case are readily distinguishable from Analog Devices, Inc., and they demonstrate that TSG would likely prevail on the merits of its claim for misappropriation of trade secrets. Using the factors enunciated by Area Landscaping, L.L.C., 160 N.C. App. at 525, 586 S.E.2d at 511, TSG presented -14sufficient evidence on its specific trade secrets to warrant protection. First, Rosenstein testified that the company spends $500,000.00 per year on research and development in order to create unique finishes and applications for his customers. Defendant testified that the results of his experimentation at TSG regarding specific outside of TSG. process refinements were not known Rosenstein also testified that defendant’s work was not something that anyone else in the industry would know without years of trial and error by experienced technicians. Security measures employees were defendant was acknowledged in place familiar in in were charge its with of order such the that proprietary developing. that TSG The “maintains security measures over its finishing process.” its employees, confidentiality customers, forms to and only information trial court significant Indeed, TSG made facility protect top-level visitors this sign information. Additionally, Rosenstein testified that defendant’s disclosure of the trade secrets would give ACF the opportunity to save “untold amounts of hours, days, weeks, and months to come up with these finishes and these applications.” Rosenstein testified that defendant could help ACF achieve their customers’ desired results, which they sometimes shared with TSG, without -15spending the invested. money on research and development that TSG Defendant admitted as much in his deposition when he testified that he performs many of the same duties for ACF for some of the same customers that he formerly served at TSG. Therefore, unlike in Analog Devices, Inc., there was significant evidence showing that TSG’s trade secrets were transferrable to ACF. Over the dollars to compiled through past develop two and his decades, protect years of TSG the invested millions information employment. The of defendant director of operations at TSG testified in deposition that defendant would sometimes work for more than a year on a process in order to achieve a desired result. There is no indication in the record that these process are able to be “reverse engineered” like those in Analog Devices, Inc., and it is undisputed that they are not generally known throughout the industry. In sum, each of the factors identified by the Area Landscaping, L.L.C. Court weigh in plaintiff’s favor. Plaintiff specifically which identified the production claims trade secret protection. factors for it Defendant acknowledged during his deposition that he performed research and development for these factors during his time at TSG and was responsible for keeping customer- and fabric-specific proprietary information -16regarding these processes on the style data cards. Therefore, we conclude that plaintiff has carried its burden of presenting evidence sufficient to identify the specific trade secrets protected by the TSPA. Additionally, we hold that plaintiff presented prima facie evidence of evidence . misappropriation . . is not of its necessary trade to secrets. establish a “Direct claim for misappropriation of trade secrets; rather, such a claim may be proven through circumstantial evidence.” Medical Staffing Network, Inc. v. Ridgway, 194 N.C. App. 649, 658, 670 S.E.2d 321, 329 (2009). Defendant testified that he is being asked to perform similar duties for ACF that he did at TSG, including evaluating customer needs and organizing production processes. Defendant acknowledged that TSG and ACF share customers and that he is currently working with multiple customers for ACF that he served at TSG. Specifically, he admitted that he had done independent research and experimentation for TSG on the needle punch, finish, and heating processes for one specific customer that he now serves at ACF, and that he talks about the various components personnel. of the This TSG is style data precisely cards the with type ACF management of threatened misappropriation, if not actual misappropriation, that the TSPA -17aims to prevent through issuance of a preliminary injunction. See N.C. Gen. Stat. § 66-154(a) (2013) (“[A]ctual or threatened misappropriation of a trade secret may be preliminarily enjoined during the pendency of the action and shall be permanently enjoined upon judgment finding misappropriation . . . .”); see also Horner Intern. Co., __ N.C. App. at __, 754 S.E.2d at 859 (“Courts have upheld grants of a preliminary injunction where plaintiffs have presented some evidence that former employees have or necessarily will use trade secrets.”). Based on the foregoing, we conclude that plaintiff demonstrated a likelihood of success on the merits of his claim for trade secret misappropriation. II. Breach of Contract Plaintiff next argues that the trial court erred by concluding that it failed to present a likelihood of success on the merits of its claim for breach of the non-compete. We agree. Due to Pennsylvania “[R]estrictive a choice law of governs covenants are law provision enforcement not favored in of in the the agreement, non-compete. Pennsylvania and have been historically viewed as a trade restraint that prevents a former employee from earning a living.” Hess v. Gebhard & Co. -18Inc., 808 A.2d 912, 917 (Pa. 2002). However, “restrictive covenants are enforceable if they are incident to an employment relationship between the parties; the restrictions imposed by the covenant are reasonably necessary for the protection of the employer; and the restrictions imposed are reasonably limited in duration whether and to geographic enforce requires the business interests earning a a court living extent.” non-compete to balance against in his or the Id. Thus, agreement, “the chosen assessing Pennsylvania employer’s interest her in of the law protectable employee profession, trade in or occupation, and then balance[e] the result against the interest of the public.” Id. at 920. Here, the trial court rejected plaintiff’s argument that the non-compete was enforceable for three reasons: (1) the agreement does not contain an explicit “assignability” clause that would allow defendant to be bound to the contract after bankruptcy reorganization, wherein all of the company’s assets and contracts were transferred from TSG, Inc. to its subsidiaries; (2) even if there were an assignability clause, there is no indication in the record that the non-compete was actually assigned from TSG, Inc. to plaintiff; and (3) even if the court concluded that there was an effective assignment, the -19balancing of the equities would require the trial court to find the non-compete unenforceable. First, defendant relies on Hess for the proposition that an explicit assignability clause was necessary for plaintiff to enforce the non-compete. In Hess, the Pennsylvania Supreme Court determined that employment contracts are “personal performance of both the employer and the employee.” A.2d at 922. to the Hess, 808 Thus, if an employer with a valid non-compete in an employment contract is later acquired by a separate entity, it does not necessarily follow that “the employee would be willing to suffer a restraint on his employment for the benefit of a stranger to the original undertaking.” Court held that “a restrictive Id. covenant Thus, the Hess not to compete, contained in an employment agreement, is not assignable to the purchasing business entity, in the absence of a specific assignability provision, where the covenant is included in a sale of assets.” Id. The situation in this case is not one where plaintiff was a “stranger to the original undertaking.” assets between two companies at arms’ Unlike the sale of length, like the transaction that took place in Hess, the assignment in this case took place in the context of a bankruptcy reorganization, where -20the same company policies and management were retained. Plaintiff is a wholly owned subsidiary of TSG, Inc., with whom defendant entered into the non-compete. As Rosenstein testified at the hearing, “[i]t’s not a new entity. . . . the same company it was.” it’s basically According to defendant, every aspect of his job remained unchanged after the assignment. the facts here Pennsylvania are courts more analogous have declined to to those make Therefore, cases where assignability provisions a requirement, such as with a stock sale or merger, because the contract rights are not given to a completely new entity. See J.C. Ehrlich Co., Inc. v. Martin, 979 A.2d 862, 865-66 (Pa. 2009) (holding that where an employee’s obligations and duties did not change in any material way after a stock purchase, a non-compete agreement was enforceable by the company with whom the agreement assignability clause). was made without an explicit Accordingly, we reject the trial court’s conclusion that the non-compete is unenforceable because it did not contain a specific assignability provision. Second, we find that the trial court erred by concluding that there assignment is insufficient between TSG, Inc. evidence and in the plaintiff. record The of an Bankruptcy Court order makes implicit mention of plaintiff as an “operating -21subsidiary” and of the assignability of the non-compete as an “executory contract.” Specifically, the order contains the following: As of the Effective Date, all Executory Contracts that are not designated to be rejected by the Debtor in the Plan Supplement shall be deemed assumed. Any assumed Executory Contract to which the Debtor is a party shall be, as of the Effective Date, deemed assumed by the Reorganized Debtor and assigned to the TSG Real Estate Subsidiary or the TSG Operating Subsidiary, as the case may be. Entry of this Order shall constitute, pursuant to Section 365 of the Bankruptcy Code, approval of the assumptions and assignments described herein as of the Effective Date. The Debtor shall not be required to obtain any third party consents to affect such assignment. At the hearing, Rosenstein specifically testified that the noncompete between plaintiff. TSG, Inc. and defendant was assigned to We conclude that Rosenstein’s testimony, in addition to the Bankruptcy Court’s approval of the executory contract assignments in its order, was sufficient to find that the noncompete was assigned to plaintiff in the course of the bankruptcy reorganization. Additionally, we believe that the restrictions imposed in the non-compete are reasonable. Under Pennsylvania law, the burden show is unreasonable on in the employee order to to prevent its how a non-compete enforcement. John is G. -22Bryant Co., Inc. v. Sling Testing & Repair, Inc., 369 A.2d 1164, 1169 (Pa. 1977). The non-compete provided that upon termination, defendant would be prevented from participating in the field of “textile finishing” for two years in the prohibited territory, which was defined, in part, as all of North America. Specifically, the non-compete prevents defendant from: [E]ngaging, as an employee or contractor, in the performance of Textile Finishing, engaging in the manufacture of Textile Finishing machinery or equipment, including but not limited to a jobber, reseller, or dealers of used textile machinery or equipment or engaging in sales, marketing or managerial services for any individual or entity that competes with TSG directly or indirectly within the Prohibited Territory. In contrast to unenforceable non-competes restricting “any work” competitive to the employer, Zimmerman v. Unemployment Compensation Bd. Of Review, 836 A.2d 1074, 1081 (2003), the noncompete here permissibly restricts defendant from engaging in the specific industrial practices that could harm the legitimate business interests TSG seeks to protect. Furthermore, defendant has failed to carry his burden of demonstrating that unreasonable and Pennsylvania courts the time render have and the geographic non-compete consistently restrictions are unenforceable. enforced non-compete agreements restricting employment for two or more years. See -23John G. Bryant Co., Inc., 369 A.2d at 1170 (holding that a three-year restriction was reasonably necessary for the protection of the employers to strengthen customer contact after a principal employer). sales representative stopped working for the Additionally, Pennsylvania courts have established a correlation between reasonableness of a geographic restriction and the employer's verifiable market. See Volunteer Firemen’s Ins. Servs., Inc. v. CIGNA Prop. & Cas. Ins. Agency, 693 A.2d 1330, federal 1338 (Pa. courts nationwide or appropriate. Super. have 1997). upheld throughout Specifically, covenants the region restricting of North Pennsylvania competition America, where See Quaker Chem. Corp. v. Varga, 509 F.Supp.2d 469, 476 (E.D.Pa. 2007). TSG presented evidence that it serves customers throughout at least 38 states, in addition to Canada and Mexico. Defendant claims that TSG failed to explain how the geographic restrictions are reasonable, and also argues that the cases TSG inapposite. cites in support of the time restriction are However, the burden is not on TSG to establish that the restrictions in the non-compete are reasonable; rather, the burden rests with defendant to show that they are unreasonable and that the contract he signed is unenforceable. See John G. -24Bryant Co., Inc., 369 A.2d at 1169. Defendant has failed to carry that burden here. Finally, we turn to the trial court’s determination that the equities “Fundamental weighed . against . any . to enforcing enforcement the non-compete. determination is the threshold assessment that there is a legitimate interest of the employer to be protected as a condition validity of a covenant not to compete.” precedent to the Hess, 808 A.2d at 920. “Generally, interests that can be protected through covenants include trade secrets, confidential information, good will, and unique or extraordinary skills.” Id. “[T]he issue of enforceability is one to be determined on a case-by-case basis,” Missett v. Hub Intern. Pennsylvania, LLC, 6 A.3d 530, 539 (Pa. Super. 2010), wherein the Court is to consider all relevant facts and circumstances, Insulation Corp. of America v. Brobston, 667 A.2d 729, 734 (Pa. Super. 1995) (also noting that “[a] restrictive covenant found to be reasonable in one case may be unreasonable in others”). Among the important factors that Pennsylvania courts consider in assessing the enforceability of a non-compete are: (1) the circumstance under which the employment relationship was terminated; (2) the employee’s skills and capacity; (3) the -25length of time of the previous employment; (4) the type of consideration paid to the employee; (5) the effect of restraint on the employee’s conditions. life; and (6) circumstantial economic See Brobston, 667 A.2d at 737. It bears noting that there is a significant factual distinction between the hardship imposed by the enforcement of a restrictive covenant on an employee who voluntarily leaves his employer and that imposed upon an employee who is terminated for failing to do his job. The salesman discharged for poor sales performance cannot reasonably be perceived to pose the same competitive threat to his employer’s business interests as the salesman whose performance is not questioned, but who voluntarily resigns to join another business in direct competition with the employer. . . . [O]nly when the novice has developed a certain expertise, which could possibly injure the employer if unleashed competitively, will the employer begin to think in terms of a restrictive covenant[.] Id. at 735-36 (citation and quotation marks omitted). Based notions on weigh the in record favor before of us, we enforcement believe of the that these non-compete. Defendant worked at TSG for 27 years and became one of its most trusted and skilled managers. Throughout his tenure he developed valuable expertise in the field of textile finishing through trial-and-error and industrial experimentation that was highly guarded by TSG and not known throughout the industry. In -26exchange for his assent to the non-compete, defendant was offered an annual increase of $1,300.00 to his regular salary and a signing bonus of $3,500.00; defendant considered TSG’s offer for at least two weeks before eventually agreeing to the non-compete and accepting this increase in compensation. Rather than being terminated for poor work, defendant was specifically recruited and competitor voluntarily at a plant left five TSG miles to away notice or asking for a raise from TSG. work for without a direct giving prior ACF did not require defendant to provide a resume or interview for the position; defendant was hired after meeting with an ACF representative one time. Given that defendant possessed advanced expertise in the field of textile finishing and abruptly and voluntarily left his position at TSG after 27 years of service to work for a direct competitor, we find that he poses a significant competitive threat to TSG’s legitimate business interests should the noncompete be unenforceable. Despite these factors, defendant argues, and the trial court agreed, that enforcement of the non-compete essentially renders him unemployable for two years because he has “no experience outside of textile finishing, rudimentary computer skills, and no college education.” We are unpersuaded. -27Defendant argued management in skills his in brief dealing that with ACF hired employees, him human for “his resources issues, equipment dealers, customer complaints and suppliers, not for which any he trade might secrets know from or other his confidential time at TSG[.]” information Skill in management and human resources is desirable in many fields, not just textile finishing. defendant from working Although the non-compete does restrict as an employee for any company that competes with TSG “in sales, marketing or managerial services,” TSG’s competitors only comprise a small subset of companies and industries where such skills are valuable. Defendant admitted that before leaving TSG for ACF, he did not look for other employment. TSG presented evidence of multiple job openings within 25 miles of Hickory, N.C., that were not competitive to TSG and listed experience in plant management and manufacturing as desirable traits. court’s conclusion Therefore, we disagree with the trial that enforcement of the non-compete would effectively prevent defendant from attaining employment anywhere in North America. We also persuasive. find TSG TSG’s employs policy around arguments 160 people. in this case According to Rosenstein, the customers that defendant now serves at ACF could -28account for up to forty percent of TSG’s business, and some of the customer relationships that TSG has had for many years are now “strained” due to defendant’s transition from TSG to ACF. In weighing the equities, we are permitted to consider the effect that breach of a non-compete may have on an employer’s protectable business interests. these, we consider the Hess, 808 A.2d at 920. potential harm done to Among other TSG employees should defendant be permitted to retain employment at ACF in contravention of the non-compete. that defendant’s actions pose to TSG’s The significant risk competitive advantage indirectly threaten the job security of many others who work for TSG. Thus, in balance, we find that the equities favor enforcement of the non-compete. In sum, we hold that the non-compete was validly assigned to plaintiff through bankruptcy reorganization, the non-compete itself is reasonable to protect TSG’s legitimate business interests, and the equities weigh in favor of enforcement under these facts. Therefore, because it is undisputed that defendant is in breach of the non-compete by working for ACF, a direct competitor of TSG, we hold that TSG has demonstrated a likelihood of success on the merits of its claim for breach of contract. -29III. Irreparable Loss Having set out that TSG has demonstrated a likelihood of success on the merits of its claims, we must now turn to whether it has shown irreparable loss should the injunction fail to issue. See A.E.P. Indus., Inc., 308 N.C. at 401, 302 S.E.2d at 759-60. This Court has recognized that “[i]ntimate knowledge of the business operations or personal association with customers provides an opportunity to [a] . . . former employee . . . to injure the business of the covenantee.” N.C. App. 174, 178, 566 quotation marks omitted). S.E.2d QSP, Inc. v. Hair, 152 851, 854 (2002) (internal Both the QSP, Inc. and A.E.P. Indus., Inc. Courts have “emphasized that this potential harm warrants injunctive relief,” Id. held that Specifically, in QSP, Inc., the Court the irreparable plaintiff loss unless a company was preliminary likely to injunction sustain was issued where the evidence showed that: (1) the defendant violated a non-compete company, agreement (2) the by soliciting defendant customers misappropriated for the a rival plaintiff company’s confidential information for the rival company, and (3) the plaintiff would continue to suffer injury should the defendant not be restrained from further confidentiality and non-compete agreement. violating a QSP, Inc., 152 N.C. -30App. at 179, 566 S.E.2d at 854. (1) defendant has the Here, the evidence shows that: opportunity to misappropriate the confidential information and trade secrets that he developed for TSG; (2) ACF could benefit by having defendant’s knowledge of TSG’s trade secrets because it could produce similar products without expending resources on research and development; (3) defendant performs similar work at ACF for some of the same customers that he served at TSG; (4) Rosenstein testified that those customers could amount to as much as forty percent of TSG’s business; (5) TSG had relationships with these customers for decades; and (6) TSG’s relationships with these customers became “strained” once defendant left TSG to work for ACF. Like in QSP, Inc., it is clear here that TSG has demonstrated that it is likely to suffer irreparable loss unless the injunction is issued, because TSG is at risk of losing its long-held customers and whatever competitive advantage textile finishing industry. it may have had in the See also John G. Bryant Co., Inc., 369 A.2d at 1167 (“[A non-compete] is designed to prevent a disturbance between in [the the relationship employer] and that their has been accounts established through prior dealings. It is the possible consequences of this unwarranted -31interference with customer relationships that is unascertainable and not capable of being fully compensated by money damages.”). Conclusion For the foregoing reasons, we conclude that the trial court erred by denying injunction. plaintiff’s motion to issue a preliminary Plaintiff has demonstrated a likelihood of success on the merits for its claims of trade secret misappropriation and breach of contract and has shown irreparable loss absent the issuance of the preliminary injunction. Accordingly, we reverse the trial court’s order and remand with instructions to issue the preliminary injunction. REVERSED AND REMANDED. Chief Judge McGEE and Judge BELL concur.

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