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Leggett & Platt, Inc. v. Fleetwood Industries, Inc.

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

July 9, 2015



DOUGLAS HARPOOL, District Judge.

Before the Court is Plaintiffs' Motion for Temporary Restraining Order and Preliminary Injunction. (Doc. No. 3). The Court held a hearing on Plaintiffs' Motion for Temporary Restraining Order on July 7, 2015. A later hearing will be scheduled on the Preliminary Injunction at which time the parties may present additional evidence. After careful review of the briefs and exhibits submitted by the parties and considering the testimony of witnesses and arguments made by counsel, this Court denies Plaintiffs' Motion for Temporary Restraining Order.


Plaintiffs are the current employer of Charlie Zhu. Zhu is the Operations Manager of Leggett & Platt's Beeline division located in Shanghai, China. Zhu has been employed by Leggett for approximately 15 years. As Operations Manager he supervises the two other Beeline employees located in Shanghai. Zhu oversees quality control and procurement for Beeline's China operations.

On approximately July 14, 2014, Leggett made a public announcement that it sought to sell its Store Fixtures Group, which included Beeline, Zhu's employer. In order to help facilitate a sale of the Store Fixtures Group, Leggett hired C.W. Downer, an investment banker firm, to help with the sale. Fleetwood was one of the companies interested in the potential purchase of Leggett's Store Fixtures Group. As a result of their interest, Leggett, through its agent, C.W. Downer, entered into a non-disclosure agreement ("NDA") with Fleetwood. (Exhibit 3). The NDA was signed on September 4, 2014, by Fleetwood's CEO and President and an agent of C.W. Downer.

The NDA contains the following paragraph regarding the solicitation of employees:

You agree, for a period of twothree years from the date of this Agreement, not to directly or indirectly (through your Representative, professional search firms or otherwise) solicit for employment any employees of the Company, the Business or any of their subsidiaries with whom you have had contact or who was identified to you during the period of your investigation of the Company or the Business without the Company's prior written consent. The preceding sentence does not, however, prohibit you from making general solicitations for employment or hiring anyone who responds to, by means of general advertisements, public notices, or internal or external websites or job search engines nor directed to target the Company/Business or any of the Company's employees.

The NDA further provides:

You agree that money damages would not be a sufficient remedy for any breach of this Agreement by you or your Representatives and that in addition to all other remedies the Company shall be entitled to specific performance and injunctive or other equitable relief as a remedy for any such breach.

After several discussions, meetings and negotiations, Fleetwood's potential purchase of the Store Fixtures Group went "sideways" and negotiations ended in mid-May 2015. Beeline's president testified there are two other potential buyers currently in negotiations with Leggett regarding the purchase of the Beeline division.[1]

On or about June 8, 2015, Zhu submitted a letter of resignation (Exhibit 33) announcing to Leggett that he was resigning his employment. Leggett subsequently discovered Zhu had accepted employment with Fleetwood as the head of its China Operations.

On August 6, 2014, prior to the execution of the NDA between Leggett and Fleetwood, Zhu sent an email to Pam Demarest, one of Fleetwood's Vice Presidents, stating: "I heard your company is looking for a person that will be in charge of your Shanghai office. I am quite interested in this role so please review my CV as following:" (Fleetwood Exhibit 1). Demarest testified Fleetwood had posted a general advertisement on their website, and through LinkedIn, that they were looking to fill this position. Leggett acknowledges it was unaware of this email at the time it filed this lawsuit. (See Plaintiffs' Supplemental Brief in Support of Injunctive Relief, Doc. No. 16).

Zhu, who is presumed to still be in China, did not testify at the hearing, was not represented at the hearing, and has not been served by the Plaintiffs in this lawsuit. He was notified of the hearing through an e-mail sent by Plaintiffs' counsel. Plaintiffs submitted Leggett's Labor Contract with Zhu. The Labor Contract, entered into by Leggett & Platt's Shanghai Consulting Company and Zhu states, in part, "In accordance with the Labor Contract Law of the People's Republic of China and regional, provincial and local laws and other related regulations...." It includes a labor dispute clause which includes arbitration rights. (Exhibit 32). And further indicates that "if either Party objects to the arbitration awards, it may institute a proceeding with a competent court in China within 16 days after receipt of such award." The Court's review of this document indicates the labor contract is subject to the jurisdiction of the Chinese courts.

Leggett argues that the Labor Contract's provision stating "Employee shall abide by his/her obligations to Employer pursuant to the Employee Invention and Confidential Information Agreement and the Non-Compete Agreement" provides further restrictions on Zhu's potential employment with Fleetwood and also subjects him to this Court's jurisdiction. However, there is no evidence before the Court Zhu ever signed a document entitled Employee Invention and ...

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