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Parameter LLC v. Poole

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

December 9, 2019

PARAMETER LLC, doing business as PARAMETER SECURITY, Plaintiff,



         This matter is before the Court on the motion (ECF No. 27) of Plaintiff Parameter LLC, d/b/a Parameter Security (“Parameter”) for a preliminary injunction with respect to its claims against Defendants John Poole (“Poole”) and Wren & Associates, LLC, d/b/a Network Technology Partners (“NTP”). The Court heard oral argument on this motion on November 25, 2019.[1] Upon review of the entire record, including the evidence properly before the Court for purpose of this motion, Parameter's motion for a preliminary injunction will be granted in part, as set forth below.


         Parameter is an information-security and digital forensics services company formed in 2007 by co-owners and married couple, Dave and Renee Chronister. Parameter is located in St. Charles, Missouri. It serves customers in more than 30 states and internationally, but its primary customer base is located in and around St. Louis, Missouri. Parameter's services include, but are not limited to: penetration testing, vulnerability assessments, web application testing, social engineering, managed vulnerability scanning, threat hunting, and virtual chief information security officer (“VCISO”) services. Parameter also sells security information and event management (“SIEM”) products.

         Poole's Employment with Parameter

         Prior to his employment with Parameter, Poole had more than four decades of general sales experience, but he had no experience in selling information security and digital forensics services. Parameter hired Poole as an at-will employee on October 3, 2011. Poole began as a salesperson and learned about the information security and digital forensics industry through on-the-job training and working with Parameter founder, Dave Chronister.

         In its written offer of employment, Parameter stated that Poole would report directly to Renee Chronister. In the same written offer, Parameter described Poole's compensation package and terms of employment as follows:

As discussed, you will report directly to Renee Chronister. Your compensation package will include a gross base annual salary of $35, 000 annually to be paid on the 15th and last day of each month, supplemented by all other Parameter Security employee benefits. Your commission rate is 15% and will be paid out the following month on the 15th.
As an employee of the company, you will have access to certain confidential company information and you may, during the course of your employment, develop certain information which will be the property of the company. To protect the interests of the company, you will be asked to sign, as a condition of employment, the company's standard confidentiality agreement and non-compete agreement on the first day of employment. You will also be subject to initial and periodic background checks to include: criminal, credit and others deemed necessary by the company as well as initial and random drug tests. Failure to comply or failure of any of the aforementioned tests/background checks is cause for immediate termination.
Our company adheres to the policy of employment-at-will, which permits the company or employee to terminate the employment relationship at any time for any reason. Neither terms nor conditions contained in this employment proposal letter, nor any other written or verbal communication by a representative of our company are intended to create a contract of employment or a warranty of benefits.

ECF No. 29-3 at 22.

         Poole's base salary increased every year, but throughout his employment, Poole's commissions made up a significant percentage of his total earnings at Parameter. Aside from the offer letter, there was no written document governing Poole's commission payments at Parameter or how those commissions were to be calculated. However, the parties agree that from his hire date of October 3, 2011 to at least July 2019, Poole was paid 15% commission for the sales of Parameter products, regardless of whether the sale was to a new or existing customer.[2] As to when commissions became due to Poole, there does not appear to be any dispute that, typically, Poole was not paid a commission until Parameter received payment from the customer, and Poole was then paid a commission the following month. As Poole described it in his deposition in this case, “if we signed a contract in January, the first check came in February, I would be paid in March.” ECF No. 35-1 (“Poole Dep.”) at 94:10-12.

         Throughout his employment, Poole was Parameter's primary salesperson. In June of 2018, Poole assumed the title of “Director of Sales, ” but this was a title change only. Both before and after his title change, Poole was responsible for developing business leads and building relationships with potential and existing customers; assessing customer risks, needs, and specifications; selling Parameter's products and services, including Parameter's SIEM product AlienVault; and preparing and submitting proposals and statements of work. As a function of these duties, Poole had regular access to Parameter's proprietary business information, including significant customer data, contact names, contract status and pricing information, and customer needs and specifications. Aside from Parameter's two founders, who had some existing clients, Poole was the only Parameter employee whose role was predominantly sales-focused.

         For the first seven years of his employment with Parameter, Poole reported to Renee Chronister, who was in charge of Parameter's sales and operations. However, beginning in 2018, Dave Chronister took over Parameter's sales. According to Poole, shortly after Dave Chronister took charge of sales, Parameter began paying Poole's commissions late or not paying them at all. According to Poole, Dave Chronister at times refused to discuss with Poole the status of his commissions and sales and refused to provide Poole an accounting of that information, stating that Parameter had “two sets of books” and that Poole was “not going to see that information.” Poole Dep. at 175: 12-18.

         Employment Agreements

         The day he was hired, October 3, 2011, Poole signed the following relevant documents: an Agreement for Employment (“Employment Agreement”), and a Non-Compete Agreement (“Non-Compete”).[3] In short, these Agreements prevent Poole from (1) competing with Parameter's business for a period of 12 months following termination; (2) disclosing Parameter's confidential information and trade secrets to anyone, or using such information for his own benefit, at any time; (3) soliciting or accepting competitive business from those Parameter's customers with whom he had any contact or whom he had solicited during his last 12 months of employment with Parameter, for a period of 12 months following termination; and (4) soliciting Parameter's employees for a period of 12 months following termination.

         I. Employment Agreement

         The Employment Agreement provided:

[I]n consideration of Employee's employment or continued employment with an Employer, access to Employer's confidential information, and the wages, salaries, bonuses and other benefits which will be given to Employee at this time or during such time as Employee is employed by Employer Entity, Employee hereby agrees to the following:
Non-Solicitation. During Employee's employment with Employer and, if the employment of Employee is terminated for any reason whatsoever, whether by Employee or Employer and whether with cause or without cause, for a period of 12 months[4] after the date of such termination (the “Termination Date”), Employee agrees that he or she will not, either personally or as an employee, agent, director, officer, shareholder, associate, partner, manager, owner, agent, advisor, independent contractor, proprietor, consultant or otherwise engage in the actions set forth in the following severable sub-parts: (a) directly or indirectly solicit or accept business from any customers, clients, or partners of Employer with which Employee had direct or indirect contact, or which were solicited by Employee during the 12 months[5] [sic] period immediately preceding the Termination Date, for products or services that are competitive with products or services provided by Employer as of the Termination Date; and (b) directly or indirectly solicit, hire, recruit, divert or take away from Employer the services of any of the employees or agents of Employer, or induce in any way any non-performance of any of the obligations of such employees or agents to Employer; and (c) shall not own, manage, operate, consult, contract or be an employee or otherwise in a business substantially similar to or competitive with the present business of the Employer or such other business activity in which the Employer may substantially engage during the term of employment; and (d) At all times while this agreement is in force and after its expiration or termination, Employee agrees to refrain from disclosing Employer's customer lists, trade secrets, or other confidential material. Employee agrees not to make use of research done in the course of work done for Employer and agrees to take reasonable security measures to prevent accidental disclosure and industrial espionage.

ECF No. 1-1 at ¶ 1.

         The Employment Agreement further provided that Poole “shall not, either during [his] employment or after such employment is terminated . . ., disclose, divulge, communicate . . ., or use for [his] own benefit” any Parameter trade secrets or “confidential information, ” unless such disclosure or use was “reasonably required in connection with [Poole's] employment by [Parameter].” Id. at ¶ 3(b). The Employment Agreement defined “confidential information” to include:

(a) books, records, and computer disks relating to the operation, finance, accounting, sales, personnel, training practices or management of Employer; (b) business plans and strategies; (c) sales and marketing plans and information; (d) customer names, addresses, telephone numbers, email addresses, social security numbers, assets, and/or other non-public personal information regarding Parameter's . . . Clients and Consumers (Client Information) including customer vulnerabilities, security testing and findings, remediations, reports and any and all information security-related data as well as Partners; (e) price lists and pricing information; (f) cost lists and cost information; (g) the specific needs and requirements of particular customers; (h) customer service requirements; (i) pricing methods; (j) terms and conditions of customer contracts; and (k) to the extent not already covered by (a) through (j), all trade secrets of Employer. Employee understands that his/her obligation to maintain the confidentiality and security of the Employer's trade secrets and Confidential Information[6] remains with him/her even after his/her employment with the Employer ends and continues for so long as such material remains a trade secret, non-public or constitutes Confidential Information.

Id. at ¶ 3(a).

         The Employment Agreement stated that nothing therein altered the employment-at-will relationship and included an acknowledgment that violation of the Agreement would result in irreparable injury warranting injunctive relief. Id. at ¶¶ 7-8.

         II. Non-Compete

         The Non-Compete provided:

For good consideration and as an inducement for Parameter Security (Company) to employ John Poole (Employee), the undersigned Employee hereby agrees not to directly or indirectly compete with the business of the Company and its successors and assigns during the period of employment and for a period of 1 year following termination of employment and notwithstanding the cause or reason for termination.
The term “not compete” as used herein shall mean that the Employee shall not own, manage, operate, consult, contract or be an employee in a business substantially similar to or competitive with the present business of the Company or such other business activity in which the Company may substantially engage during the term of employment.

ECF No. 1-2.

         Next, the Non-Compete required that Poole refrain, for a period of 12 months after termination, from: (1) “directly or indirectly solicit[ing] business from customers, clients, partners and the like of Company[7] [or] engag[ing] in . . . any enterprise conducting business activities that are the same or similar to those of Company”; (2) “solicit[ing] orders, directly or indirectly, from any customers or partners of Company, or from any customers of its successor, for such products/services as are sold by Company and its successor, either for himself or as any employee . . . of any person, firm, or corporation”; and (3) “directly or indirectly solicit[ing] any . . . employee of Company for employment elsewhere . . . .” Id.

         Finally, like the Employment Agreement, the Non-Compete prohibited Poole from “disclosing Company's customer lists, trade secrets, or other confidential material, ” and from “mak[ing] use of research done in the course of work done for Company” at any time, even “after [the Non-Compete's] expiration or termination.” Id. The Non-Compete contained a statement acknowledging that “the Company shall or may in reliance of this agreement provide Employee access to trade secrets, customers, and other confidential data and good will.” Id.

         Change in Poole's Commissions

         According to Poole, in May 2019, he went on vacation and was gone for more than two weeks. Prior to leaving, he set up an automatic reply email to existing clients indicating that, in his absence, they should contact Dave Chronister. Poole contends that, upon his return, Parameter informed him that Dave Chronister and others had made sales to existing clients and that, as a result of these relationships, Parameter no longer needed Poole's services. Poole testified in his deposition that Dave Chronister told Poole that Poole was “of no value to this relationship anymore.” Poole Dep. at 137:4-7. Poole also contends that, shortly thereafter, on June 26, 2019, Dave Chronister emailed Parameter's human resources provider to inquire about terminating Poole. However, Parameter did not terminate Poole at that time.

         In July 2019, Dave Chronister proposed changing Poole's commission structure and salary in order to reduce Poole's commission rate on sales to existing clients but increase Poole's base salary. Specifically, on July 15, 2019, Chronister emailed Poole a proposal to: (1) keep his commission on sales to new customers at 15%; (2) change his commission on sales to existing customers to 5%; and (3) give Poole a $22, 000 raise to his base salary, from approximately $50, 000 at the time to a little over $70, 000. The email included a spreadsheet with a detailed breakdown of the proposal. Per Chronister, this was done because Poole was not focusing sufficiently on new customers, as opposed to existing customers.

         On July 22, 2019, Poole sent Chronister a text message saying that the spreadsheet “looks good” but that he wanted to discuss it further. ECF No. 29-3 at 28. Specifically, Poole had questions regarding how a sale would be attributed to a new customer as opposed to recurring business. The ...

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