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Church Mutual Ins. Co. v. Sands

United States District Court, W.D. Missouri, Southern Division

July 9, 2014

CHURCH MUTUAL INSURANCE COMPANY, Plaintiff,
v.
ROBERT J. SANDS, et al., Defendants.

ORDER GRANTING IN PART AND DENYING IN PART MOTIONS TO DISMISS

GREG KAYS, Chief District Judge.

This case concerns a non-compete agreement. Plaintiff Church Mutual Insurance Company ("Church Mutual") formerly employed Defendant Robert J. Sands ("Sands"). Sands has left Church Mutual's employ and now works for Defendant Spracklen Insurance Services, Inc. ("Spracklen").

Pending before the Court are two motions: Spracklen's Motion to Dismiss (Doc. 20) and Sands's Motion to Dismiss (Doc. 22). For the reasons articulated below, the Court GRANTS IN PART and DENIES IN PART these motions.

Standard

Defendants move to dismiss the Complaint under Federal Rule of Civil Procedure 12(b)(6). A complaint must meet two conditions to survive a Rule 12(b)(6) motion. First, it must "contain sufficient factual matter, accepted as true, to state a claim to relief." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Although the complaint need not make detailed factual allegations, "a plaintiff's obligation to provide the grounds' of his entitlement to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007).

Second, the complaint must state a claim for relief that is plausible. Iqbal, 556 U.S. at 678. A claim is plausible when "the court may draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. The plaintiff need not demonstrate the claim is probable, only that it is more than just possible. Id.

In reviewing the complaint, the court construes it liberally and draws all reasonable inferences from the facts in the plaintiff's favor. Smithrud v. City of St. Paul, 746 F.3d 391, 395 (8th Cir. 2014). Further, the court generally must ignore any materials outside the pleadings. Id.

Background

Construing the Complaint liberally and drawing all reasonable inferences in Church Mutual's favor, the Court finds the facts to be as follows for purposes of resolving the pending motion to dismiss:

Church Mutual specializes in selling insurance to churches and other religious institutions. To remain competitive, Church Mutual has developed extensive proprietary information including territory-specific customer lists, premium data, policyholder expiration data, coverage information, claim history, pricing data, financial data, marketing data, prospect lists, and claims information. Church Mutual maintains this information with regard to both current clients and non-Church Mutual insureds whom it is targeting. Church Mutual protects its information from external disclosure because a competitor in possession of this knowledge would save time and money in conducting prospect research, know when to solicit current and former policyholders, and know how to undercut Church Mutual's premiums.

Church Mutual protects this information in a variety of ways. It does not allow individuals outside the company to access the information. It electronically encrypts and password-protects this data, which is stored in a separate, secure facility. Church Mutual monitors electronic access of the data and restricts which of its own employees may see the data. Finally, Church Mutual prevents its sales representatives from disclosing trade secrets after they leave the company by requiring them to sign a so-called non-compete agreement. Under this agreement, the employee promises not to sell insurance to religious institutions in his sales territory for three years after termination. Church Mutual uses a three-year term for its noncompete agreements because it takes about three years for its sales representative to service all of his accounts and because its confidential information fades in relevancy after about three years.

Sands began working for Church Mutual as a sales representative in July 2002. When he started at Church Mutual, Sands signed a contract stating in part:

Employee agrees that he/she will not sell or solicit property and casualty insurance to churches and other religious institutional properties for a period of three years within the geographical territory being serviced by the Employee at the time of termination of this agreement or in any territory serviced by him/her within three years prior to his/her termination. Employee acknowledges that a three year prohibition against solicitation as above set forth is reasonable. In addition, Employee hereby agrees that in the event of any breach, or threatened breach of this agreement, Company shall have the right to full injunctive relief and Employee hereby consents to the entry of an appropriate court order granting such injunctive relief.

While at Church Mutual, Sands served Church Mutual's Sales Territory 52: Barry, Christian, Douglas, Greene, Jasper, Lawrence, McDonald, Newton, Ozark, Stone, Taney, Webster, and Wright Counties in southern Missouri.[1] Sands ceased working for Church Mutual on November 9, 2012.

Church Mutual later discovered that Sands now works for Spracklen, a competing insurance provider. In October 2013, Seminole Baptist Temple, a Church Mutual client, canceled its insurance policy midway through the policy period. Seminole Baptist Temple told Church Mutual that it was switching to Spracklen and that Sands is its agent. Church Mutual believes that Sands and Spracklen have solicited at least four other Church Mutual customers in Sales Territory 52. In January 2014, Sands again solicited an unidentified Church Mutual client.

Church Mutual filed a nine-count Complaint (Doc. 1) in March 2014. Spracklen and Sands each filed a motion to dismiss (Docs. 20, 22), collectively ...


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