Document Technologies, LLC v. Hess ( 2019 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
DOCUMENT TECHNOLOGIES, )
LLC )
)
Plaintiff, )
)
Vv. ) Case No. 1:19-cv-3257
)
DAVID HESS )
)
Defendant. )
ee )
MEMORANDUM OPINION
Plaintiff Document Technologies, LLC (“DTT”) has filed an application with this Court
for a Temporary Restraining Order (“TRO”) against defendant David Hess. ECF No. 7. Mr. Hess
opposes the TRO application. ECF No. 10. For the reasons set forth below, the Court will deny
DTT’s request for a TRO.
BACKGROUND
DTI is a company that provides on-site services to law firms. These services include
procurement of personnel, procurement of equipment, technology solutions,
scanning/printing/copying, mailing/shipping/faxing, supply management, facilities management,
etc. Mr. Hess began working for DTI in June of 2015 as a Site Manager and was promoted to
Senior Operations Manager in October of 2017. His promotion made him second-in-command
for DTI’s Mid-Atlantic Region, which includes operations in the D.C., Baltimore, and Northern
Virginia areas (“DMV area”). His responsibilities included servicing and growing client
accounts, fostering relationships with potential new clients, managing approximately 115 DT]
employees, training DTI employees, and assisting James Ferguson (DTI’s Regional Director of
Operations for the Mid-Atlantic Region) with all aspects of regional operations. All of the
accounts that Mr. Hess oversaw were law firms or other entities in the legal industry in the DMV
area. During his employment with DTI, he had access to DTI’s confidential and proprietary
information.
On April 25, 2018, Mr. Hess signed an Employment, Confidential Information, Invention
Assignment, and Arbitration Agreement (“Agreement”). This Agreement included a non-
compete clause, which states:
NON-COMPETITION. I recognize and acknowledge that by virtue of accepting
employment hereunder, I will acquire valuable knowledge, enhance my
professional skills and experience, and learn proprietary trade secrets and
Confidential Information of the Company and its customers. In consideration of the
foregoing and this agreement, I agree that for a period of twelve (12) months
immediately following the termination of my employment with the Company for
any reason, I will not conipete against the Company or any subsidiary or affiliate
to which I provided services during the course of my employment with the
Company, or engage in employment with or provide independent contractor or
consulting services for any person, corporation, firm or other entity which provides
any service or services which are the same or similar to the service or services
offered by the Company or any subsidiary or affiliate to which I provided services
during the course of my employment with the Company, within the relevant
territories. I agree to the reasonableness of the restraint imposed under this
paragraph.
The Agreement also contained a non-solicitation clause, which states:
NON-SOLICITATION OF CUSTOMERS. I acknowledge and agree that the
identity of the Company’s customers and specifics related thereto constitute
Confidential Information of the Company, and that my sale or unauthorized use or
disclosure of any such Confidential Information would constitute unfair
competition. Accordingly, I agree that for a period of twelve (12) months
immediately following the termination of my employment relationship with the
Company: for any reason, J shall not, directly or indirectly, either on behalf of
myself or for any other person, corporation, firm, comparty or other business entity,
do any of the following acts: (a) solicit, serve or cater to any of the Company’s
customers whom I solicited, served or catered to on behalf of the Company or with
whom I became acquainted during the course of my employment with the
Company; (b) divert or attempt to divert any of the Company’s customers or any
of the business or patronage of such customers; or (c) call upon, influence or
attempt to influence any of the Company’s customers to transfer their business or
patronage from the Company to me or to any other person, corporation, firm,
company or business entity engaged in a business similar to the Company’s
business.
The Agreement also contained a confidential information clause, which states:
CONFIDENTIAL INFORMATION. | [ agree at all times during the term of my
employment and thereafter, to hold in strictest confidence, and not to use or disclose
to any person, firm or corporation, except for the direct benefit of the Company,
any Confidential Information of the Company or any of its customers. I understand
that “Confidential Information” means any information of the Company, its
vendors or its customers including but not limited to any proprietary information,
technical data, trade secrets or know-how, information relating to research, product
plans, products, services, customer lists, customers, markets, software,
developments, inventions, processes, formulas, technology, designs, drawings,
engineering, hardware configuration, marketing or finances, or other business
information in any form including but not limited to electronic, oral, visual, or hard
copy. I further understand that Confidential Information does not include any of
the foregoing information or items that are publicly known and generally available
through no wrongful act of mine or of others who were under confidentiality
obligations as to the item(s) or information involved.
Mr. Hess claims that he expressed concern to Mr. Ferguson about suddenly being asked
to sign the Agreement three years into his employment with DTI. Mr. Ferguson told Mr. Hess
that he would have to sign the Agreement if he wanted to continue working at DTI. Mr. Hess
claims that Mr. Ferguson assured him that DTI would not actually enforce the Agreement against
him, at which point Mr. Hess agreed to sign the document.
On September 16, 2019, Mr. Hess submitted his letter of resignation (effective September
27, 2019) to Mr. Ferguson. He indicated that he would be taking a new job at Forrest Solutions,
which is a competitor of DTI. Mr. Hess told Mr. Ferguson that Forrest Solutions has a focus
outside the legal community and said that he would be taking over the southeast region down to
Florida. The parties dispute whether Mr. Hess misled or intended to mislead Mr. Ferguson about
the nature of his new job during this conversation.
In his new position at Forrest Solutions, Mr. Hess has worked with Ogletree, Deakins,
Nash, Smoak & Stewart, P.C.’s Washington, D.C. office (“Ogletree”). DTI claims that it has
previously made efforts to perform staffing for copy room services as well as front desk services
for Ogletree, but it does not appear that Ogletree was ever DTI’s customer.! DTI believes Mr.
Hess’s work with Ogletree violates the Agreement, and it sent cease & desist letters to both Mr.
Hess and Forrest Solutions. DTI is broadly concerned about Mr. Hess’s employment with Forrest
Solutions, claiming that he should not be permitted to do this work, particularly in the DMV
area. DTI has also raised concerns about Mr. Hess’s knowledge of DTI’s confidential and
proprietary information.
On October 29, 2019 DTI filed a Complaint against Mr. Hess. ECF No. 1. On November
26,2019, DTI filed its TRO application.” Later that sarne day, Mr. Hess agreed during a
telephone conference with the plaintiff and the Court that he would not enter the Ogletree
premises nor serve as Forrest Solutions’ representative to Ogletree during the pendency of this
lawsuit, and the Court entered a Minute Order requiring him to abide by that agreement on
November 27, 2019.
LEGAL STANDARD
Injunctive relief is an “extraordinary remedy.” Winter v. Nat. Res. Def. Council, Inc., 555
U.S. 7, 22 (2008). The movant bears the burden of demonstrating that: (1) it has a substantial
likelihood of succeeding on the merits; (2) it will suffer irreparable harm if the injunction is not
granted; (3) other interested parties will not suffer substantial harm if the injunction is granted;
and (4) the public interest would be furthered by the injunction. Chaplaincy of Full Gospel
' Although Ogletree is not one of DTI’s clients, Ogletree is representing DTI in this lawsuit.
2 That application fully complied with Federal Rule of Civil Procedure 65, which governs TROs.
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Churches v. England, 454 F.3d 290, 297 (D.C. Cir. 2006). The Court considers the same factors
in deciding whether to issue a TRO as it does when deciding whether to issue a preliminary
injunction. Baker DC, LLC v. National Labor Relations Board, 102 F. Supp. 3d 194, 198-99
(D.D.C. 2015).
ANALYSIS
Upon consideration of the four factors listed above, the Court finds that DTI has not met
its heavy burden to show that a TRO is necessary. The Court will therefore deny the TRO
request. DTI has indicated that if its TRO application is denied, it will “promptly file a separate
motion to request leave of Court to pursue limited, expedited discovery which would be used in
support of Plaintiff's expected Motion for Preliminary Injunction.” ECF No. 9 at 5. Specifically,
DTI plans to ask this Court for leave “to issue a subpoena duces tecum to Forrest Solutions for’
documents relating to Mr. Hess’ employment with them, whether he has entered into a
noncompetition agreement with them, and the extent to which he has engaged in conduct while
working for Forrest Solutions which violated his continuing contractual obligations to DTT.”
ECF No. 14 at 9. DTI also plans to request “leave to depose Defendant Hess within seven (7)
calendar days after it receives documents in response to the subpoena duces tecum to Forrest —
Solutions.” Jd. If DTI decides to pursue that course of action, the Court will thoroughly consider
DTI’s motion as well as any opposition thereto.
I. It is Unclear Whether Plaintiff has a Substantial Likelihood of Success on the Merits.
| The first factor to consider is whether the movant has a substantial likelihood of success
on the merits. Although DTI very well could succeed on the merits, it has failed to prove that
such success is substantially likely. The Court firmly disagrees with Mr. Hess’s assertion that
“DTI has no chance of succeeding on the merits,” (ECF No. 10 at 9) but DTT’s ultimate success
does hinge in part on the validity of the Agreement. The Agreement is governed by Georgia law,
meaning that the parties will be making arguments regarding both Georgia contract law and the
Restrictive Covenant Act (GA. CODE ANN. §§ 13-8-50) as well as any other statutes that may
apply. The Court cannot declare that DTT has a substantial likelihood of success on the merits
without first providing the parties an opportunity to brief those legal issues affecting the
enforceability of the Agreement. Additionally, Mr. Hess’s opposition to the TRO application
raises potentially troubling circumstances surrounding Mr. Hess’s consent to the Agreement. The
Court cannot speculate as to the validity of the agreement without a full understanding of the
facts that led him to sign the Agreement and without providing the parties an opportunity to
explain why those circumstances are or are not relevant to the Agreement’s enforceability.
’ Essentially, although DTI has certainly raised a facially valid claim against Mr. Hess, its ultimate
success remains an open question. Furthermore, even if this factor did weigh in DTI’s favor, as
explained below, the second factor would still lead the Court to deny the TRO application.
II. Plaintiff Failed to Demonstrate Imminent, Concrete, Irreparable Harm.
DTI has not met its heavy burden under the second factor to show that it will suffer
imminent and irreparable harm absent a TRO. Issuance of a TRO may not be based on a mere
“possibility of irreparable harm.” Winter, 555 U.S. at 22. Rather, it “requires a clear showing” of
irreparable harm entitling the movant to this “extraordinary remedy.” Jd. Although there is a
chance that Mr. Hess’s employment with Forrest Solutions could lead to some harm, DTI has not
yet suffered irreparable damage, nor has it alleged with the requisite specificity what such
damage would look like if it were to occur in the near future.
DTI has alleged six different types of harm that it believes warrant a TRO:
e Irreparable Harm — Issue No. 1 — The great risk of irreparable damage to
its customer relationships because Mr. Hess is working for a direct
competitor in the same territory that he worked in for DT];
e Irreparable Harm — Issue No. 2 — The fact that an account for DTI in
Baltimore, Maryland, is coming up for rebid in November 2019, and other
accounts that Mr. Hess worked on for DTI will also be coming up for rebid
within the next year, and the significant risk [he] could work to help Forrest
Solutions capture the business that DTI is currently performing;
e Irreparable Harm — Issue No. 3 — The fact that Mr. Hess could readily use
the good will that belongs to DTI as well as the in-depth confidential and
proprietary information that he gained while working for DTI for the benefit
of Forrest Solutions for DTI’s other accounts and prospective accounts;
e Irreparable Harm — Issue No. 4 — The heightened threat of irreparable
harm to DTI based upon the blatant, willful nature of Mr. Hess’ wrongful
conduct;
e Irreparable Harm — Issue No. 5 — The fact that the forms of irreparable ,
harm which Plaintiff will suffer if a TRO is not granted cannot be
reasonably quantified and remedied via monetary damages; and
e Irreparable Harm — Issue No. 6 — The imminent and grave likelihood of
irreparable harm if Defendant Hess were permitted to continue to enter
Ogletree’s Washington, D.C. office and if he were permitted to continue to
manage the account on behalf of Forrest Solutions, due to the significant
risks that such would pose to the integrity of the litigation process in this
case.
ECF No. 14 at 5-6. After analyzing each of the six harms, however, the Court finds insufficient
grounds to issue a TRO.
Issue No. 1 asserts that Mr. Hess could harm DTI by working for its direct competitor in
the DMV area. Although theoretically this could be true, DTI has failed to state with any
specificity what that harm looks like. It has not alleged any precise facts about what Mr. Hess.
has done to take business away from DTI. Although working for a direct competitor may be in
violation of the Agreement (which will be determined during the merits stage of the litigation), a
violation of the Agreement on its own is not sufficiently harmful to warrant the issuance of a
TRO.
Issue No. 2 discusses accounts that are coming up for rebid in the near future and with
which DT] is concerned that Mr. Hess may interfere. Mr. Hess, however, has stated that he does
not even know what accounts DTI is referring to, and DTI has not disclosed those names. Even if
DTI were to disclose those names, DTI would need to establish that Mr. Hess is currently trying
to foster a relationship with those customers on Forrest Solutions’ behalf or is otherwise acting in
a manner that harms DTI’s chances of securing a rebid. Issue No. 2 is simply too vague to
constitute irreparable harm worthy of a TRO.
Issue No. 3 raises concerns that Mr. Hess had access to DTI’s proprietary and
confidential information. DTI, however, has failed to establish that Mr. ‘Hess has used or is
planning to use that information to benefit Forrest Solutions or to harm DTI. DTI cited Robert
Half Int’l Inc. v. Billingham in arguing that this Court should grant its TRO application, 315 F.
Supp. 3d 419, 432-34 (D.D.C. 2018). In Billingham, the plaintiff established that the defendant
had actually disclosed confidential information, which constitutes irreparable harm “because
such information, once disclosed, loses its confidential nature.” Jd. at 433 (quoting Hospitality
Staffing Sols., LLC v. Reyes, 736 F. Supp. 2d 192, 200 (D.D.C. 2010). In contrast, DTI has made
no such showing of actual disclosure in this case. The mere fact that Mr. Hess knows the
information may make DTI uneasy or apprehensive, but uneasiness and apprehension are not the
types of concrete harm with which TROs are concerned.
Issue No. 4 asks for a TRO based on the “blatant, willful nature” of Mr. Hess’s wrongful
conduct. This assertion is exceedingly vague, but the Court takes it to mean that a TRO is
necessary because Mr. Hess intentionally violated the Agreement. If this interpretation is correct,
DTI is asking the Court to issue a TRO simply because Mr. Hess allegedly violated the
Agreement. The alleged violation of the Agreement is undoubtedly upsetting and concerning to
DTI, but it is a far cry from irreparable harm necessitating a TRO.
Issue No. 5 explains that DTI believes a TRO is necessary because monetary damages
could not be readily quantified and would not be an adequate remedy. This assertion, however,
does not constitute a harm in and of itself; rather, it presupposes the existence of concrete harm.
Because DTI has failed to prove that it would be irreparably harmed by any specific conduct of
Mr. Hess, monetary damages would be an adequate remedy if DTI ultimately succeeds on the
merits. DTI would undoubtedly prefer to preempt these theoretical harms through a TRO, but
that does not change the fact that DTI has not shown how irreparable injury would result absent
that TRO.
Issue No. 6 deals specifically with Mr. Hess’s work with Ogletree. Based on Mr. Hess’s
agreement not to have contact with Ogletree during the pendency of this litigation and the
Court’s Minute Order of November 27, 2019, Issue No. 6 is clearly moot. Mr. Hess cannot pose
any “significant risks to the integrity of the litigation process” if he has no further contact with
Ogletree. Therefore, Mr. Hess’s past involvement with Ogletree is insufficient to warrant a TRO.
The second factor is of vital importance to the TRO analysis. Even if all three additional
TRO factors indicate that a TRO is warranted, failure to show specific, concrete, irreparable
harm is still “grounds for refusing to issue a preliminary injunction.” England, 454 F.3d at 297.
Therefore, even if the other three factors weighed in DTI’s favor, the Court would still refuse to
issue a TRO in this case.
il. A Temporary Restraining Order Could Substantially Injure Mr. Hess.
A TRO would injure Mr. Hess, as it would effectively prevent him from continuing with
his job at Forrest Solutions. Of course, if his actions leading up to this litigation truly violated a
valid and enforceable employment contract, then such injury would be irrelevant. If, however,
there is some legal or factual reason why Mr. Hess is not in breach of the Agreement, issuing a
TRO would be a significant burden. Therefore, in this case, the analysis of the first factor is
directly tied to the analysis of this third factor.
DTI also raises the argument that the Court should issue a TRO because Mr. Hess
consented to it by signing the Agreement. Not only does this argument presume that the
Agreement is enforceable, but it ignores the fact that DTI has failed to allege any irreparable
injury under the second factor. Although Mr. Hess may have acknowledged that DTI would be
entitled to injunctive relief if he violated the Agreement, such acknowledgement does not meet
the legal standard for this Court to issue a TRO. DTI even concedes that a defendant’s consent to
the issuance of equitable relief is merely one issue to be considered. Billingham, 315 F. Supp. 3d
at 433. In light of DTT’s inability to show irreparable harm under the second factor, Mr. Hess’s
supposed consent is not a sufficient reason to grant the TRO application. Furthermore, even if
the third factor did weigh in DTI’s favor, the second factor alone would still lead the Court to
deny the TRO application.
IV. A Temporary Restraining Order Could Potentially Further the Public Interest.
| If Mr. Hess did violate a binding employment contract, then issuing a TRO would further '
the public interest by ensuring that people are bound by their agreements. It would also send a
message that employment contracts are enforceable. As explained in the analysis of the first
factor, however, it is not entirely clear what happened in this case. Not only would DTI need
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more facts to prove all of its allegations against Mr. Hess, but there are legal issues regarding the
enforceability of the Agreement that the Court has not yet had the opportunity to consider fully.
Therefore, in this case, the analysis of the first factor is directly tied to the analysis of this fourth
factor. Although a TRO that protects a party to a contract can in some circumstances further the
public interest, that is not necessarily what would be happening here. Furthermore, even if this
factor did clearly weigh in DTI’s favor, the second factor would still lead the Court to deny the
TRO application.
CONCLUSION
’ Based on the foregoing, the Court will DENY plaintiff Document Technologies, LLC’s
application for a Temporary Restraining Order (ECF No. 7) against defendant David Hess.
A separate Order accompanies this Memorandum Opinion.
Date: stlegtea “Cana Lotet
Royce C. Lamberth
United States District Court Judge
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