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Panera, LLC v. Dobson

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

February 28, 2019

PANERA, LLC, Plaintiff,
v.
JAMES DOBSON, et al., Defendants.

          OPINION, MEMORANDUM AND ORDER

          HENRY EDWARD AUTREY UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Plaintiff's Motion for a Temporary Restraining Order [Doc. No. 2] and Defendants' Motion to Dismiss [Doc. No. 17]. A hearing on both motions was held on February 27, 2019.

         Facts and Background

          Plaintiff Panera, LLC (“Panera”) is a fast casual dining company with over 2, 300 branded bakery-cafes throughout the United States and Canada. Defendants James Dobson, Krish Gopalakrishnan, and James Phillips (collectively, “Employees” or “Individual Defendants”) were employees of Panera who each served in a Directorial position in Panera's Information Technology (“IT”) department as of January, 2019. Defendant Act III (“Act III”) owns and manages several fast causal brands.

         The Individual Defendants each executed non-compete agreements with Panera, both upon their hiring or promotion to the Director level, and, most recently, on November 13, 2017. The November 13, 2017 re-execution was accompanied by a stock grant to each Individual Defendant. The parties to the non-competes are Panera and each respective Individual Defendant. The non-competes contain a six-month prohibition on employment with a competitor of Panera, as well as a forum selection clause that proscribes litigation take place in Missouri.

         Ron Shaich (“Shaich”) is the former President, CEO, and Chairman of the Board of Directors of Panera. Shaich is now the controlling member and manager of Act III. Shaich avers that Panera knew of his involvement in Act III, as he began forming Act III while still the Chairman of Panera's Board, and therefore “each and every one of [his] investments was vetted and approved by the board.” (Shaich Aff. ¶ 25).

         Nevertheless, relations between Panera and Act III soured in 2018 when the president of one of Act III's restaurant holdings went to work for Panera. Act III threatened to enforce the president's non-compete agreement; Panera claimed the agreement was invalid. On December 6, 2018, Act III and Panera entered into a settlement agreement (the “Settlement”). Pertinent here are the following subsections of the Settlement:

6. Employee Matters
a. . . . Act III [or an Act III Entity] . . . may
i. solicit past, current and future employees of Panera for employment with an Act III Entity;
ii. make an offer of employment to past, current and future employees of Panera; provided, however, that the Act III Entity must first provide written notice of the offer of employment . . . to Panera at least two weeks before any commencement of employment by a Panera employee (the “Notice Period”); . . . and
b. During the Notice Period, Panera may:
i. negotiate terms for the employee to remain employed by Panera, or
ii. decide that it will waive the terms of any applicable non-competition agreement that it has with the employee with respect to such employee's ...

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