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Panera, LLC v. Nettles

United States District Court, E.D. Missouri, Eastern Division

August 3, 2016

PANERA, LLC, Plaintiff,
v.
MICHAEL R. NETTLES and PAPA JOHN’S INTERNATIONAL, INC., Defendants.

          MEMORANDUM AND ORDER

          JOHN A. ROSS UNITED STATES DISTRICT JUDGE

         This matter is before the Court on the motion of Plaintiff Panera, LLC (“Panera”), for a temporary restraining order (“TRO”) (Doc. No. 2). A hearing on Panera’s motion was held on July 27, 2016, at which counsel for Panera and Defendants Michael Nettles (“Nettles”) and Papa John’s International, Inc. (“Papa John’s”) appeared. For the following reasons, the motion will be granted.

         BACKGROUND

         The facts, summarized herein, are set forth in Panera’s complaint. Panera is a corporation that operates “bakery-cafes, ” located in urban, suburban, strip mall, and regional mall locations throughout the country. Nettles was an employee of Panera from 2012 through June 2016, and he served as the Vice President of Architecture in Panera’s Information Technology department. Panera describes Nettles as “a critical leader in Panera’s IT department, ” and asserts that he “was invited to join many of Panera’s high-level discussions relating to its strategies as it relates to use of its technologies.” (Doc. No. 1 at 4-5.) Panera also alleges that it “prides itself on being several steps ahead of the game in developing its technological systems, ” and cites as an example its recent “Panera 2.0” program, “an integrated, comprehensive, end-to-end solution that aims to reduce wait times, improve order accuracy, and minimize or eliminate crowding[.]” Id. Panera asserts that in his role as Vice President of Architecture, Nettles had access to valuable and confidential information, including information related to Panera’s strategic business plans.

         As a condition of Nettles’ employment with Panera, he signed a confidentiality and non-competition agreement in 2012, and a revised version of that agreement in 2013. Neither party disputes that both iterations of the agreement were supported by adequate consideration. The 2013 amended agreement specifically listed Papa John’s as Panera’s competitor (along with approximately 28 other companies), and barred Nettles from working for competitor companies for a period of one year following the end of his employment with Panera. The agreement stated that a violation of the non-compete clause would constitute irreparable harm to Panera, and that an injunction would issue in the face of such a violation. (Doc. No. 7-1 at 1.)

         On June 8, 2016, Nettles sent a lengthy email to Panera’s CEO explaining his desire to accept an offer of employment in a corporate executive role with Papa John’s based in part on his wife’s recent and untimely death, and requesting a waiver of the non-competition agreement. Panera’s CEO did not agree to such a waiver. Despite not receiving a waiver from Panera’s CEO, Nettles tendered his resignation to Panera on July 1, 2016, with sixty days’ notice, but Panera asked him to leave immediately. Nettles began working for Papa John’s as Senior Vice President, Chief Information and Digital Officer, on July 18, 2016.

         Panera claims that Nettles stored and had access to confidential and proprietary Panera materials on his personal laptop, and potentially on other electronic personal devices. Upon his resignation, Nettles apparently created a backup directory of Panera’s files, which he transferred to a Panera-issued laptop. Nettles then deleted the Panera materials from his personal computer, and seemingly returned his personal computer to the factory-issued settings.[1]

         Panera’s Complaint alleges that Nettles’ actions constitute a breach of contract, and that by hiring Nettles, Papa John’s negligently interfered with a contractual relationship. In addition, Panera asserts causes of action for violation of the Defend Trade Secrets Act, the Missouri Uniform Trade Secrets Act, the Missouri Computer Tampering Act, and Civil Conspiracy against both defendants.

         In the instant motion for a TRO, Panera asks that the Court enjoin Papa John’s from employing Nettles or using any confidential information derived from Nettles. Panera asks that Nettles be similarly enjoined from working for or disclosing trade secrets or confidential information to Papa John’s. Finally, Panera asks the Court to order Nettles to provide his personal laptop and any other materials that may have housed Panera information for review and inspection. In response, Nettles argues that the confidentiality and non-competition agreement is not enforceable because (among other reasons) Panera and Papa John’s are not competitors. In addition, Nettles argues he essentially signed the 2013 agreement under duress because his wife was dying and battling cancer. Nettles also contends that an agreement requiring Nettles not to divulge Panera’s confidential information would be a sufficient and less-restrictive means of preventing any irreparable harm. Finally, Nettles asserts that Panera has offered mere conjecture regarding the purported misappropriation of trade secrets.

         DISCUSSION

         In determining whether to issue a TRO, the Court must consider the following four factors:

         (1) the threat of irreparable harm to the movants; (2) the balance between this harm and the injury that granting the injunction will inflict on other parties litigant; (3) the probability that movants will succeed on the merits; and (4) the public interest. Dataphase Sys., Inc. v. C L Sys., Inc., 640 F.2d 109, 113 (8th Cir. 1981) (en banc). “While no single factor is determinative, the probability of Panera suggests that this means the “metadata” associated with the information-which might reveal when or to whom Nettles transferred the information-is no longer accessible. success factor is the most significant.” Home Instead, Inc. v. Florance, 721 F.3d 494, 497 (8th Cir. 2013) (citation omitted). The party requesting injunctive relief bears the “complete burden” of proving that an injunction should be granted. Gelco Corp. v. Coniston Partners, 811 F.2d 414, 418 (8th Cir. 1987).

         A. Likelihood of Success on the Merits

         The Court is satisfied that Panera is likely to succeed on the merits of several of its claims, including its request for enforcement of the confidentiality and noncompetition agreement, as well as its request for injunctive relief in order to ...


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