UNITEDSTATESDISTRICTCOURT

DISTRICTOFMINNESOTA
FirstFinancialSecurity,Inc.,
aDelawareCorporation,
Plaintiff,
v. MEMORANDUMOPINION
ANDORDER
CivilNo.141843(MJD/SER)
GillesMoua,anindividual,
andMaiLee,anindividual,
andDOES1100,
Defendants.
__________________________________________________________________
DavidD.VanSpeybroeckandCliffordS.Davison,SussmanShankLLPand
LouseneM.Hoppe,Fredrikson&Byron,P.A.,CounselforPlaintiff.
JonE.Drucker,LawOfficesofJonE.DruckerandCarolynG.Anderson,
ZimmermanReed,PLLP,CounselforDefendants.
___________________________________________________________________
I. Introduction
TheaboveentitledmattercomesbeforetheCourtonPlaintiffFirst
FinancialSecurity,Inc.s(FFS)motionforapreliminaryinjunction.ByOrder
datedJuly29,2014,thisCourtgrantedFFSsmotionforatemporaryrestraining
order.AtthetimethatOrderwasentered,Defendantshadnotappearedinthis
action,andtheClerkofCourthadentereddefaultagainstthem.
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Defendantsarenowrepresentedbycounselandaremovingtosetaside
thedefaultandtotransfervenuetoCalifornia.Defendantsalsoobjecttothe
entryofapreliminaryinjunction.
TheCourtheldanevidentiaryhearingonthemotionforpreliminary
injunctiononSeptember3,2014.
II. Background
FFSisalifeinsurancebrokerageagency.DefendantGillesMouawasan
independentsalescontractorforFFSanditspredecessorGlobalGroupFinancial
(GGF)from2003untilhisresignationonMay10,2014.In2005,Mouawas
promotedtoExecutiveFieldChairman(EFC)andasofMay2013,hewasFFSs
highestpaidEFC
1
.Priortohisresignation,therewereapproximately14,700sales
contractorsonhisteam,ofwhich1,404werelicensed.DefendantMaiLeelives
withMoua,andwasalsoalicensedsalescontractorforFFSuntilherresignation
onMay10,2014.
AllFFScontractorsmustsignaSalesContractAgreement(Agreement),
whichprohibitsthesalescontractorfrominteralia,inducinganFFScustomerto
1
FFSassertsthatMouassalesteamrepresented42%ofFFSs2013commissionincome
of$25,500,000,andsince2007,FFShaspaidMouaover$6millionincommissions.
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terminateorreducetheircoverage,inducinganotherFFScontracttoterminate
theiraffiliationwithFFS,usingconfidentialinformationortradesecretsofFFS
andsolicitingothercontractortopurchaseproducesotherthanthoseofferedby
FFS.
OneofMouasdownlineagentswasSouksakhoneKhammanivong.She
testifiedthatshewasamemberofthechampionclub,asshehadearnedover
$100,000incommissionsinthecourseofoneyear.Khammanivongisaresident
ofTexasandhasvisitedMinnesotaforleadershipmeetingswithMoua,Leeand
othersinthechampionclub.Shetestifiedthatsheattendedonesuchmeetingin
March2014inSt.Paul,Minnesota,andatthismeeting,Mouabeganpromoting
thethemethatadividedLaoswilldieandaunitedLaoswilllive.Thissame
themewasalsobroughtupduringanFFSdreamdestinationcruisethat
MouasteamwasawardedinApril2014.
OnMay10,2014,keymembersofMouasFFSsalesteamwerescheduled
tomeetat1:00p.m.attheofficeofAndreMoua,GillesMouasson,in
Woodbury,Minnesota.(TestimonyofSouksakhoneKhammanivongandSaveng
Vongkhamsene.)ThemorningofMay10,2014,however,Khammanivong
receivedaphonecallfromMouaslieutenant,NoneiVorasane,tellinghertogo
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toMouashomeinWayzatainsteadoftheWoodburyoffice.Khammanivong
testifiedthatshearrivedatMouashomeataround10:00a.m.Whensheentered
thehome,Mouatoldherthathehadnotinvitedhertohishome.Shewas
confusedbythestatement,andthensatdownatthekitchentable.Shortly
thereafter,NoneiarrivedatthehomeandsheandMouasdaughterbeganto
handoutaformthatwastitledCertificationofNonSolicitation.(PlaintiffsEx.
1.)Theseformsincludedblanksforthenamesandsignaturesofagents,and
providedthattheagentinitiatedcontactandresignedfromFFSontheirown,
andperformedtheirownduediligencetobeassociatedwiththenewfirm.
ThosewhowerepresentatMouashomeweretoldthattheyhadtosigntheform
inordertostayatMouashomeandtohearwhatwouldhappennext.
Khammanivongtestifiedthatshebelievedshehadtosigntheformasmanyof
theotherkeyleadersweresigningtheform,andbecauseshewantedtoremainat
Mouashometofindoutwhatwashappeningwiththebusiness.
Aftershesignedtheform,shetestifiedthatthegroupwentintothe
basementandviewedapowerpointpresentationbyMoua.MouacomparedFFS
andFEG,andmentionedthatFEGofferedmoregenerousequitysharingthan
FFS,whichwouldresultinmembersreceivingahighercommission.Mouaalso
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informedtheteammemberstoallowpoliciesatFFStolapse,andthenresign
thematFEG.MaiLeealsoexplainedtothemembersthatwithregardtoresidual
incomestillowedtothembyFFS,teammembersshouldaskFFSnicelyforsuch
payments.
Afterthepresentation,teammemberswereprovidedassistancetoresign
fromFFS.Threelaptopsweresetupinthebasement,andCharlesMoua,Nonei
VorasaneandothersprovidedassistancetothosewhowantedtoresignfromFFS
andenlistwithFEG.
Khammanivongtestifiedthatthroughouttheday,moreteammembers
arrivedatMouashome,andthatitappearedthemoredownlineanagentwas,
thelatertheyshowedup.SavengVonkhamsenewasaregionalmarketing
directoranddownlineagentfromKhammanivong,andhetestifiedthathe
arrivedatMouashomelaterintheafternoonafterhereceivedatextmessage
fromNoneiVorasane.(PlaintiffsEx.3.)UponarrivalatMouashome,
Vonkhamsenetestifiedthathewasgiventhenonsolicitationformtosign,and
toldthathehadtosigntheformorleaveMouashome.Noneiclarifiedthatin
orderforVonkhamsenetohearwhatwasgoingtohappen,hehadtosignthe
form.Becausehebelievedthathecouldonlygettrainingifhesignedtheform,
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Vonkhamsenedidso.Hewasthendirectedtogotothebasementwhereother
teammemberstoldhimhewouldhavetoresignfromFFStohearaboutthebig
move.VonkhamsenetestifiedthathedidnotwanttoresignfromFFS,but
eventuallyhedidsobygivinghisiPadtoScottNhativongsothathecouldsend
aresignationemailtoFFS.AfterresigningfromFFS,Vonkhamsenetestifiedthat
hejoinedFEG.
BothMouaandLeetestifiedthattheyresignedfromFFSatapproximately
6:00a.m.onMay10,2014.LeetestifiedthatMouadidnottellherthathewas
resigninguntilthatmorning.Althoughtheybothtestifiedthatmanyoftheir
teammemberscametotheirhomelaterthatday,andthattheyweregiventhe
nonsolicitationformstosign,theydidnotinvitethem.Instead,theteam
memberscametoMouashomeontheirownaftertheydiscoveredthattheir
accesstotheFFSwebsitefromwhichtheydidbusinesshadbeenblocked.
MichaelHardin,FFSVicePresidentofSalesManagement,testifiedthatasa
matterofordinarybusinesspractice,whenanagentresignedfromFFS,his/her
accesstotheFFSwebsitewouldbeblocked.Withrespecttothiscase,Hardin
testifiedthatheonlyblockedanagentsaccessafterthatagenthadresigned.
FollowingtheresignationsofMouaandLee,FFSreceivedmass
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resignationsfromagentsdownlinefromthem.(TestimonyofMargaretJones.)
JonesbelievedthattheorderinwhichMouasteamresignedwasimportant,
becauseitallowedtheMouahierarchytoremainintactwhenitmovedtoFEG.
ByMay22,2014,FFSreceivedover1,300resignations.ByJune4,2014,FFS
alsoreceived74NoticesofCancellationsofapplicationsassociatedwiththe
resigningsalesteam.FFSalsoreceivednoticesofchargebacks
2
frominsurance
companies;someofwhicharebasedontheaforementionedapplication
cancellationsandothersarebasedonacustomersfailuretopay.
FFSbroughtthisactionassertingclaimsofbreachofcontractand
misappropriationoftradesecrets.FFSmovesforpreliminaryinjunctivereliefto
preventDefendantsfromusingordisclosingconfidentialinformationofFFSand
fromsoliciting,recruiting,inducingorotherwiseengaginganyFFSsales
contractorstoterminatetheirrelationshipwithFFStobecomeassociatedwith
FEGoranyotherFFScompetitor.FFSalsoseekstoenjoinDefendantsfrom
workingwithFFScustomers.
III. MotiontoSetAsideDefault
2
AchargebackbasedonfailuretopayrequiresFFStorepaycommissionstothecarrier.
FFSthenpassesthechargebacktothesalescontractor,whoisthenrequiredtorepayFFS.
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DefendantGillesMouawaspersonallyservedacopyofthesummonsand
complaintinthismatteronJune10,2014athishomeinWayzata,Minnesota.
(Doc.No.22)DefendantMaiLeewasalsopersonallyservedacopyofthe
summonsandcomplaintinthismatteronJune10,2014atthehomesheshared
withDefendantMoua.(Doc.No.23)BothMouaandLeedidnottimelyfilean
answertothecomplaintorotherpleadinginthismatter,andtheClerkentered
defaultagainstthemonJuly3,2014.(Doc.Nos.38and39.)Defendantsnow
movethisCourttosetasidethedefaultsenteredagainstthem.
Rule55(c)providesthatthecourtmaysetasideanentryofdefaultfor
goodcause...TheCourtshouldlooktowhetherthedefaultingpartywas
blameworthyorculpable,hasameritoriousdefenseandwhethertheotherparty
wouldbeprejudicedifthedefaultwereexcused.Johnsonv.DaytonElec.Mfg.
Co.,140F.3d781,784(8thCir.1998).
A. BlameworthyorCulpable
Whenaddressingthisfactor,theEighthCircuithaslookedtodistinguish
betweencontumaciousorintentionaldelayordisregardfordeadlinesand
proceduralrules,andamarginalfailuretomeetpleadingorotherdeadlines.
Wehaverarely,ifever,excusedtheformer.Johnson,140F.3dat784.
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Here,theDefendantsareHmongimmigrantswithlimitedEnglishskills
andtheydidnotrealizetheimportanceofthedocumentstheyreceivedwhen
personallyserved.Atthetimeofservice,bothwereintheprocessofmoving
backtoCaliforniaandlosttrackofthepackageandfailedtoforwardittoa
lawyer.Theyarguethattheyfailedtotimelyanswerthisactionduetoalackof
comprehensionandinadvertentcarelessness,nottointentionallydelaythese
proceedings.
FFSdisputesDefendantsrepresentationsthattheylackedcomprehension
oftheimportanceofthesummonsandcomplaintanddefensecounsels
representationsthatwhenhedidcommunicatewithPlaintiffscounsel,he
believedhewastalkingaboutaseparatecasethatinvolvedthesameparties.At
thistime,however,theCourtfindsthatDefendantsdidnotengageinconduct
thatweighsagainstsettingasidethedefaultenteredagainstthem.
B. MeritoriousDefense
Thisfactorfocusesonwhetherthedefaultingpartyhaspresentedevidence
thatwouldpermitafindingforthedefaultingparty,notthattheevidenceis
undisputed.Johnson,140F.3dat785.Atthistime,Defendantsdenythe
allegationsandhaveprovidedtestimonythattheydidnotinduceagentstoleave
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FFSandthattheydonotpossessFFSconfidentialmaterial.Accordingly,this
factorweighsinfavorofsettingasidedefault.
C. Prejudice
Thisfactorfocusesonwhetherthereisalossofevidence,increased
difficultiesindiscoveryorgreateropportunitiesforfraudandcollusionifdefault
issetaside. FFSassertsthatifthedefaultsaresetaside,itwillhavesuffered
monthsofdelayandincurredsignificantorotherwiseavoidablecosts.Giventhe
natureofthiscase,FFSarguesthepassageoftwomonthshasprejudicedFFSby
makingdiscoverymoredifficult,witnessesmoreremoteandtransactions
potentiallymoredifficulttounwind.SeeStephensonv.ElBatrawi,524F.3d907,
915(8thCir.2008).
Ontherecordbeforeit,theCourtfindsthattheprejudicetoDefendants
willoutweighanyprejudicetoFFSifthedefaultsarenotsetaside,giventhefact
thatFFSisclaimingmultimilliondollardamages.
TheCourtwillgrantDefendantsmotiontosetasidethedefaultsentered
againstthem.
IV. MotiontoTransferVenue
DefendantsmovetotransferthisactiontotheCentralDistrictofCalifornia
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asMouaandLeehaverecentlymovedtoLongBeach,California.
Fortheconvenienceofpartiesandwitnesses,intheinterestofjustice,a
districtcourtmaytransferanycivilactiontoanyotherdistrictordivisionwhere
itmighthavebeenbrought.28U.S.C.1404(a).Thedeterminationofwhether
totransfervenueofaparticularcaserequire[s]acasebycaseevaluationofthe
particularcircumstancesathandandaconsiderationofallrelevantfactors.
TerraIntl,Inc.v.Miss.Chem.Corp.,119F.3d688,691(8thCir.1997).To
prevailonamotiontotransfer,themovantmustshowthathisinconvenience
substantiallyoutweighstheinconveniencethatplaintiffwouldsufferifvenue
weretransferred.Nelsonv.SooLineR.Co.,58F.Supp.2d1023,1026(D.Minn.
1999).
A. ConvenienceoftheParties
DefendantsassertthattheyliveinLongBeach,Californiaanditwouldbe
ahardshiptoforcethemandtheircounseltoflytoMinnesotaandtoforcethem
toinducewitnessestoattendtrialinMinnesota.Defendantsfurtherassertthat
alloftheirbooksandrecordsareinCaliforniaandthatmanyoftheagentsthat
FFSallegeswereinducedtoleaveFFSbyDefendantsalsoliveinCalifornia.
TheyfurtherassertaCaliforniavenuewillnotimposeahardshiptoFFS,whichis
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alargeinsurancecompanywithvastresources.
TheCourtfindsthatDefendantshavenotdemonstratedthatthe
convenienceofthepartiessubstantiallyweighsinfavoroftransfer.Thereisno
disputethatwhenservedcopiesofthesummonsandcomplaintinthismatter,
DefendantswerelivingintheirhomeinWayzata,Minnesota.Despitehaving
movedtoCalifornia,DefendantstillowntheirhomeinMinnesota.FFShasalso
submittedevidencetoshowthatsincethisactionwasfiled,Defendantshave
returnedtoMinnesotaontwooccasionsforthepurposeofmeetingwith,and
rallying,theirsalesteam.(DavidsonDecl.Exs.EandF.)Further,Defendants
havenotdemonstratedthatthelocationofrelevantrecordsanddocuments
substantiallyweighsinfavoroftransfertoCalifornia.
B. ConvenienceoftheWitnesses
DefendantsassertthatitwillbeeasiertotrythiscaseinCaliforniaas
DefendantswillneedtocalldozensofCaliforniaresidentsaswitnessestomount
aneffectivedefense.
AlthoughDefendantshaveprovidedalistofthenamesofsuchwitnesses,
theyhavefailedtodemonstratethatsuchpotentialwitnessesarematerialtotheir
defense.SeeReidWalenv.Hansen,933F.2d1390,1396(8thCir.1991)(finding
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thatthecourtmustexaminethematerialityandimportanceofanticipated
witnesstestimony,thendeterminetheiraccessibilityandconveniencetoforum).
ItisDefendantsburdentomakesuchashowing.WellsFargoFin.Leasing,Inc.
v.NCHHealthcareSys.,756F.Supp.2d1086,110102(S.D.Iowa2012).
Inaddition,FFShaspresentedevidencewhichdemonstratesthatofthe
approximate1,400FFSagentsthatresignedandfollowedDefendantstoFEG,
only30haveCaliforniaaddresses,while335haveaddressesinMinnesota.
(ManzerDecl.Ex.A.)
C. InterestsofJustice
Whenaddressingthisfactor,courtshaveconsideredthefollowing:judicial
economy;plaintiffschoiceofforum;comparativecoststotheparties;each
partysabilitytoenforceajudgment;obstaclestoafairtrial;conflictoflawissues
andtheadvantagesofhavingalocalcourtdeterminequestionsoflocallaw.
TerraIntl,Inc.,119F.3dat696.
TheCourtfindsthattheinterestsofjusticeweighinfavorofdenyingthe
motiontotransfer.JudicialeconomyfavorsMinnesota,asthisCourtisalready
familiarwiththefactsandcontentionsofthiscase.Theplaintiffschoiceof
foruminthiscasefavorsMinnesota,andFFSfiledthiscaseinMinnesotaas
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DefendantswereresidentsofMinnesotaatthetimeoffiling.Minnesotaisalso
closertoFFSsheadquartersinNorcross,GA.Finally,theconductatissueinthis
casetookplaceinMinnesota.
BecauseDefendantshavefailedtomeettheirburdenofdemonstratingthat
transfertoCaliforniaiswarranted,themotiontotransfervenuewillbedenied.
V. StandardforPreliminaryInjunctiveRelief
Thelawiswellsettledthatinordertoobtainpreliminaryinjunctiverelief,
aplaintiffmustshowalikelihoodofirreparableharmintheabsenceofthe
injunction.Winterv.NaturalRes.Def.Council,Inc.,555U.S.7,22(2008).The
Courtalsoconsidersthebalancebetweensuchharmandtheinjurythatgranting
theinjunctionwillinflictonotherparties,Plaintiffslikelihoodofsuccessonthe
merits,andthepublicinterest.DataphaseSys.,Inc.v.CLSys.,Inc.,640F.2d109,
114(8thCir.1981)(enbanc).
A. LikelihoodofSuccessontheMerits
DefendantsassertthattheyhaveneversolicitedagentsorclientsofFFS,do
nothaveanyFFScustomerlistsorotherproprietaryinformation.(MouaDecl;
LeeDecl.)Inhisdeclaration,forexample,MouaexplainsthatheisaHmong
immigrantwhoseEnglishisnotverygood.(MouaDecl.2.)Hefurtherstates
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thatmanyoftheagentsunderhimwhileheworkedforFFSwerealsoHmong,
andafterheresigned,manyoftheseagentstoldhimthathehadgiventhemthe
goodlifeandthattheyleftFFSontheirown,andthatMouaneverinstructed
orevenencouragedthemtoleaveFFS.(Id.5.)MouafurtherstatesthatFFS
wrongfullytoldpeoplethatithadfiredMouaandthatFFSautomatically
assumedhisdownlineagentswereleavingwithhimandproceededtoblockthe
accessofMouasdownlineagentsfromtheFFSwebsite.(Id.)Theseagents
neededaccesstotheFFSwebsiteinordertodobusiness.(Id.)
Mouafurtherstatesthathedoesnotknowbutahandfulofthealleged
1,400agentsthatleftFFSandonlycommunicatedwithafewofthem.(Id.7.)
MouastatesthattherealreasonforthemassexodusfromFFSisfoundinthe
Hmongculture.(Id.10.)WhenhecametotheUnitedStates,hewasapoor
immigrant,andhisfirstjobwasonafarm.(Id.)WhenhesignedupforFFS,FFS
hadfewagents,andMouaworkedveryhardtoenlistotherHmongimmigrants
intohisFFSsalesnetwork.(Id.)MouafurtherstateshedoesnothaveanyFFS
customerlists,assuchlistsarelocatedontheFFSwebsite,towhichMouano
longerhasaccess.(Id.11.)
Inherdeclaration,MaiLeestatesthatsheisaHmongimmigrant.(Lee
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Decl.2.)ShefurtherstatesthatshehasneversolicitedanyagentstoleaveFFS,
hasnottriedtomoveclientsawayfromFFSandhasnocustomerlists.(Id.3
7.)BothMouaandLeealsotestifiedattheevidentiaryhearingconsistentwith
theirdeclarations.
DefendantsarguethatFFShasnotdemonstratedthatitislikelytosucceed
onthemeritsoftheirclaimsofbreachofcontractandmisappropriationoftrade
secrets.DefendantsfurtherarguethatevenifFFScoulddemonstratesuccesson
theirclaims,FFSwillnotsufferirreparableharmifthepreliminaryinjunctive
reliefisnotgranted.Further,theyarguethepublicinterestweighsinfavorof
allowingpeopletoearnalivelihood.
Basedontherecordcurrentlybeforeit,theCourtfindsthatFFShas
demonstratedalikelihoodofsuccessonthemeritsofitsclaimsthatDefendants
havebreachedtheAgreementbyinducingfellowFFScontractorstoterminate
theiraffiliationwithFFSandbyrefusingtoreturnconfidentialinformationin
violationofthesalescontractoragreementintheformofcontractorlists,
customerlistsandcustomerinformationinviolationofSectionC(4)ofthe
Agreement.
ThetestimonyofSouksakhoneKhammanivongandSaveng
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VongkhamsenedemonstratedthatpriortoMay10,2014,Defendantssetin
motionaplantomovetheirsalesteamfromFFStoFEG.First,Defendants
presentedathemeatrecentleadershipmeetingsthatadividedLaoswilldie
whileaunitedLaoswilllive.Defendantsalsoarrangedfortheirtopleadersto
beinMinnesotaonMay10,2014byschedulingaleadershipmeetingatthe
officesofAndreMouainSt.Paul,Minnesota.Atthelastminute,Mouas
lieutenantcalledorsenttextmessagestothesalesteam,inorderoftheir
placementintheteamhierarchy,tellingthemtogotoMouashomeinsteadof
theoffice.OnceatMouashome,allteammembersweretoldtheyhadtosigna
nonsolicitationforminordertostayandhearwhatwouldhappennext.Both
KhammanivongandVongkhamsenetestifiedthattheywereconfused,butfelt
theyhadnochoicebuttosignthenonsolicitationform,resignfromFFSandjoin
FEG,inordertomaintaintheirlivelihood.Khammanivong,whowasamember
ofthechampionclub,waspresentwhenMouagaveapowerpointpresentation
highlightingthebenefitofmovingtoFEG.
FFSalsopresentedevidencetoshowthatfollowingDefendants
resignations,itrequestedDefendantstoreturnanyconfidentialFFSinformation
theyhadintheirpossession,suchasFFScontractorandcustomerlists,andthat
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boththeDefendantseitherfailedtorespondorrefusedtoreturnsuch
information.
B. IrreparableHarm
Thisfactorrequiresapartyseekingpreliminaryinjunctiverelieftoshow
thattheharmiscertainandgreatandofsuchimminencethatthereisaclearand
presentneedforequitablerelief.IowaUtil.Bd.v.F.C.C.,109F.3d418,425(8th
Cir.1996).Itisalsowellsettledthateconomiclossdoesnot,inandofitself,
constituteirreparableharm....Recoverablemonetarylossmayconstitute
irreparableharmonlywherethelossthreatenstheveryexistenceofthe
[petitioner]sbusiness.PackardElevatorv.I.C.C.,782F.2d112,115(8thCir.
1986).
Courtsmayinferirreparableharmwhenaformeremployeebreachesan
enforceablerestrictivecovenant.Medtronicv.Gibbons,527F.Supp.1085,1090
91(D.Minn.1981);Thermorama,Inc.v.Buckwold,125N.W.2d844,845(Minn.
1964).Inaddition,Minnesotacourtshavefoundthatinjunctivereliefis
appropriatetopreventirreparableinjuryfromwrongfuluseofconfidential
information.Salitermanv.Finney,361N.W.2d175,179(Minn.Ct.App.1985).
TheCourtfindsthatFFShassufficientlydemonstratedthatitwillsuffer
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irreparableharmiftherequestedinjunctivereliefisnotgranted.FFShas
sufficientlydemonstratedinjunctivereliefisnecessarytopreventDefendants
fromcontinuingtosolicitsalescontractorsonDefendantMouasformersales
teamtoleaveFFSandjoinhimatFEG.
Inadditiontotheevidencethatover1,400membersofDefendantsFFS
salesteamresignedshortlyafterDefendantssubmittedtheirresignations,the
recorddemonstratesthatover13,000ofMouasformersalesteamremainatFFS.
FFShasthusdemonstratedthatinjunctivereliefisrequiredtoprevent
Defendantsfromfurtherinducingtheirformersalesteamfromjoiningthemat
FEG.
TherecordalsosufficientlydemonstratesthatDefendantshaverefusedto
returnconfidentialinformationinviolationoftheAgreementintheformof
contractorlists,customerlistsandcustomerinformationinviolationofSection
C(4)oftheAgreement.FFSisthusentitledtoaninferenceofirreparableharm.
SeeModernControls,Inc.v.Andreadakis,578F.2d1264,1270(8thCir.1978)
(recognizingthatdisclosureofconfidentialinformationmaybedisclosedinways
moresubtlethanoutrightdisclosuretoathirdparty,suchastheinabilityofa
formeremployeetopreventhisknowledgeofhisformeremployersconfidential
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methodsordatafromshowingupinhiswork).Defendantsdidnotpresentany
evidencetorebutthisinference.
TheCourtfurtherfindsthatFFShasdemonstratedthatmoneydamages,in
part,willbedifficulttocalculate,aspartofthedamagesclaimwillbebasedon
lostcommissionsonlifeinsurancerenewalsandfutureprojectionsoflost
businessgrowthandrecruitrevenues.(PlaintiffEx.4.)
C. BalanceofHarms
Thisfactorweighsinfavoroftherequestedinjunctiverelief,giventhatFFS
hasdemonstratedalikelihoodofsuccessonthemeritsandirreparableharm.
TheinjunctivereliefrequesteddoesnotpreventDefendantsfromworkingfor
FEG.Rather,Defendantsareenjoinedonlyfromengaginginconductthatwould
constituteabreachoftheAgreementwithFFS,suchasnotinducingFFSagents
toresignfromFFSandjoinFEG,andtonotuseFFSconfidentialinformation
includingFFScontractorlistsandcustomerinformation.
D. PublicInterest
Publicinterestweighsinfavorofenforcingreasonable
3
noncompetition
3
Minnesotalawhasadoptedthebluepencildoctrinewhichallowsacourttomodifya
noncompeteagreementthatisoverlybroad.SeeGuerciov.Prod.AutomationCorp.,664
N.W.2d379,384n.2(Minn.Ct.App.2003).TheAgreementsatissuehereincludeatwoyear
prohibitionperiodforinducingand/orsolicitingFFScontractorsandcustomers.ThisCourt
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covenantsincontracts.SeeEmersonElec.Co.v.Rogers,418F.3d841,847(8th
Cir.2005);Kremersv.Dahl,No.A130367,2014WL273966at*10(Minn.Ct.
App.,Jan.21,2014)(findingthatMinnesotalawfavorstheenforcementofvalid
contracts).Accordingly,thisfactorweighsinfavorofgrantingthepreliminary
injunctivereliefrequested.
ITISHEREBYORDERED:
1. DefendantsMotiontoSetAsideDefault[Doc.No.54]isGRANTED;
2. DefendantsMotiontoTransferVenue[Doc.No.60]isDENIED;
3. FFSMotionforPreliminaryInjunctiveRelief[Doc.No.7]is
GRANTED;
4. EachDefendantmustceasealluseofFFSconfidentialtradesecrets,
includingFFSsalescontractorlistsandcustomerlists;
5. ForaperiodofoneyearcommencingMay10,2014,eachDefendant
mustceasesoliciting,recruiting,inducingorotherwiseengagingany
FFScontractorstoleaveFFStoworkinconnectionwith,orinany
waybeassociatedwithFEGoranyotherFFScompetitor;
findsthatatwoyearperiodisoverbroad,andwilllimitinjunctiverelieftoaoneyearperiod
commencingthedateDefendantsresignedfromFFS.
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6. ForaperiodofoneyearcommencingMay10,2014,eachDefendant
isenjoinedfrominducingFFSsalescontractorsfrombreachingthe
Agreement;
7. ForaperiodofoneyearcommencingMay10,2014,eachDefendant
isenjoinedfromworkingwithFFScustomers;and
8. FFSshallpostabondintheamountof$100,000.
Date: September4,2014 s/MichaelJ.Davis
MichaelJ.Davis
ChiefJudge
UnitedStatesDistrictCourt
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CASE 0:14-cv-01843-MJD-SER Document 80 Filed 09/04/14 Page 22 of 22