N.D. Ga.

Garage Door Company Partially Granted TRO Against Ex-Employee Who Allegedly Stole Trade Secrets and Breached Non-Compete Agreement

D.H. Pace Company, Inc. v. Johnson et al., Civil Action No. 1:22-cv-1005-SEG (N.D. Ga. June 9, 2022)

Plaintiff D.H. Pace Company, Inc. filed suit against Defendant Matthew Johnson and Defendant Liberty Garage Door Services, LLC on March 11, 2022 in the Northern District of Georgia (Atlanta Division). The Complaint alleges nine counts: (1) violation of Defend Trade Secrets Act (“DTSA”) by Defendant Johnson; (2) violation of the Georgia Trade Secrets Act (“GTSA”) by Defendant Johnson; (3) breach of contract by Defendant Johnson; (4) violation of the Computer of Fraud and Abuse Act (“CFAA”) by Defendant Johnson; (5) breach of fiduciary duty by Defendant Johnson; (6) breach of duty of loyalty by Defendant Johnson; (7) tortious interference with contract and business relations by Defendant Johnson and Defendant Liberty; (8) aiding and abetting a breach of fiduciary duty by Defendant Liberty; and (9) expenses of litigation from Defendant Johnson and Defendant Liberty under O.C.G.A. § 13-6-1. According to the Complaint, Plaintiff provides dock and door related products and services and, in the Atlanta area, Plaintiff operates under the name Overhead Door Company of Atlanta installing, maintaining, repairing, selling, and servicing doors for residential and commercial customers. The Complaint alleges that Defendant Johnson stopped working for Plaintiff to start his own competing garage door company (Liberty) in Atlanta, stealing Plaintiff’s trade secrets and other confidential/proprietary information in order to “get an upper hand” and otherwise violating Plaintiff’s Confidentiality, Non-Compete, and Non-Solicitation Agreement.

On June 3, 2022, Judge Sarah E. Geraghty granted Plaintiff’s motion for a temporary restraining order (“TRO”) in part, enjoining Defendant Johnson from (1) acquiring an interest in as an individual, partner, stockholder, director, officer, principal, agent, consultant or employee, any business that is a direct competitor of Plaintiff; and (2) soliciting, recruiting, hiring, or attempting to hire any employee of Plaintiff, or otherwise interfere with Plaintiff’s business relationship with any of its employees. Judge Geraghty, however, denied Plaintiff’s request for a TRO for the alleged misappropriation of trade secrets under the GTSA and the federal DTSA.

In relevant part, the court noted that Plaintiff is likely to succeed on its breach of contract claims to the extent they are based on Defendant Johnson’s alleged breach of non-compete and non-solicitation covenants which appeared in Defendant’s new-hire documents, both covenants which the court recognized as reasonable and unambiguous. Nonetheless, the court held that Plaintiff failed to show a likelihood of success on the merits of its claim that Defendant breached a non-confidentiality covenant because there was insufficient evidence that Defendant disclosed/provided Plaintiff’s confidential information to anyone and it was unclear how Defendant was expected to return confidential information he possessed on his personal email account. As to Plaintiff’s GTSA and DTSA claims, the court held that Plaintiff did not establish a likelihood of success on these claims because although Defendant possessed Plaintiff’s trade secrets on his email account, there was insufficient evidence showing he improperly disclosed or used the trade secrets he possessed. Finally, the court also held that because Plaintiff did not sufficiently establish that Defendants acted purposely and with malice with the intent to injure, it was not likely to succeed on the merits of its tortious interference claim. The court then proceeded to find that a TRO would benefit the public’s interest in enforcing valid covenants protecting legitimate business interests and, in light of the irreparable harm that Plaintiff would sustain if a TRO was not issued, would not cause undue harm to Defendants.

On June 9, 2022, Judge Geraghty extended the TRO granted on June 3rd until July 29, 2022.

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