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Tuff Wrap Installations Inc. v. Cleanwrap

June 29, 2011

TUFF WRAP INSTALLATIONS INC.
PLAINTIFF,
v.
CLEANWRAP, INC. ET AL. DEFENDANTS



The opinion of the court was delivered by: Slomsky, J.

OPINION

I. INTRODUCTION

Defendant Mark Nemelkais a former employee of Plaintiff Tuff Wrap Installations, Inc. (hereinafter "Plaintiff" or "Tuff Wrap"). He was fired by Tuff Wrap and thereafter began to work for a competing business, Defendant Cleanwrap, Inc. (hereinafter "Defendant Cleanwrap"). As a result of Defendant Nemelka's activity at Defendant Cleanwrap, Plaintiff filed a Complaint on April 14, 2011 against Defendants alleging various state claims and a violation of the Lanham Act, 15 U.S.C. § 1051.*fn1 The claims relate to an Employee Confidentiality, Non-Competition and Non-Solicitation Agreement between Plaintiff Tuff Wrap and Defendant Nemelka. In addition to the Complaint, Plaintiff filed a Motion requesting a preliminary injunction, seeking to enjoin Defendant Cleanwrap from using or disclosing any confidential information that it may have received from Defendant Nemelka, and to enjoin Defendant Nemelka from working for Cleanwrap or any other Tuff Wrap competitor until the conclusion of the litigation. Tuff Wrap also sought to enjoin Defendants from soliciting or contacting any clients or customers of Tuff Wrap.

On June 10, 2011, the Court held a hearing on the Motion for a preliminary injunction. After considering the testimony and exhibits offered by the parties and their filings in this case, and for reasons that follow, the Court will grant Plaintiff's Motion.

II. FACTUAL BACKGROUND

Plaintiff Tuff Wrap is a corporation engaged in the business of interior protection. (Doc. No. 1 ¶ 2.) Interior protection services are designed to protect the interior of a building from dust and debris during a construction project. (Id. ¶ 13.) In 2002, David Campbell started Tuff Wrap, (id. ¶ 12), which maintained confidential information, including lists of existing and potential customers (id. ¶ 18). Tuff Wrap required employees with access to confidential information to sign a confidentiality agreement. (Id. ¶ 20.)

In May 2007, Tuff Wrap hired Mark Nemelka ("Defendant Nemelka"). (Id. ¶ 21.) On May 21, 2007, Defendant Nemelka began to work at Tuff Wrap in Harleysvile, Pennsylvania. (See id. ¶¶ 21-23.) On May 21 or 22, 2007, Defendant Nemelka signed a Tuff Wrap Employee Confidentiality, Non-Competition and Non-Solicitation Agreement (the "Agreement"). (See id.

¶ 23, Exhibit ("Ex.") A.).*fn2 The Agreement provides, in pertinent part:

. . . Employee will not, either during the term of his/her employment or after termination of such employment (regardless of the reason for or the party causing termination), utilize for his/her personal advantage or profit . . . furnish or divulge . . . any such Confidential Information . . .

During the term of Employee's employment by Employer and for the period of one-year after the termination of such employment . . . Employee shall not . . . contact, solicit or do business with any Customer/Client, or Prospective Customer Client of Employer . . . . (Doc. No. 1, Ex. A at Sections 1(a) and 3.) As consideration for the Agreement, Tuff Wrap gave Defendant Nemelka "one additional week of vacation annually," which extended the annual vacation time described in the Tuff Wrap Employee Handbook.*fn3 (See id. at 1; June 9, 2011, Hearing on Preliminary Injunction Ex. ("Hr'g Ex.") P1.) In exchange, as noted above, Defendant Nemelka agreed to refrain from soliciting business from or doing business with any of Tuff Wrap's current or prospective customers for a period of one year after leaving the employ of Tuff Wrap. (Doc. No. 1 ¶ 25.) Further, Defendant Nemelka was prohibited from disclosing any confidential information belonging to Tuff Wrap and from retaining any confidential information acquired during his employment, including customer lists. (Id. ¶¶ 26, 32.)

Defendant Nemelka initially worked for Tuff Wrap in Pennsylvania. (Id. ¶ 28.) He was re-located to Southern California and then to Chicago, Illinois. (Id. ¶ 30.) On September 1, 2010, after three years and three months of employment, Defendant Nemelka was terminated by Tuff Wrap. (Id. ¶ 31.)

On September 20, 2010, in response to a request from Defendant Nemelka for his personnel documents and monies owed to him, counsel for Tuff Wrap sent a letter to counsel for Defendant Nemelka*fn4 that included Tuff Wrap's intention to "enforce [the Agreement] that [Nemelka] signed." (Id. ¶ 34, Ex. B.) The letter also confirmed that Tuff Wrap owed Defendant Nemelka money for one work-week of vacation time because he had used two of the three weeks allotted to him in his third full year. (Id. at Ex. B.) A check would be mailed to Defendant Nemelka to compensate him for the week of unused vacation. (Id.)

On September 22, 2010, Defendant Nemelka's wife, Dawn Nemelka, founded Cleanwrap Inc., a Utah corporation providing interior protection services similar to the protection services of Tuff Wrap. (Id. ¶ 37.) Defendant Nemelka began working for Defendant Cleanwrap in September 2010. (Id. ¶ 38.) On September 29, 2010, counsel for Tuff Wrap sent another letter to Defendant Nemelka's attorney, this time stating that Tuff Wrap was aware that Defendant Nemelka was working for Defendant Cleanwrap and that Tuff Wrap intended to enforce its rights under the Agreement. (Doc. No. 1 ¶ 41, Ex. C.) Employees of Tuff Wrap discovered that Defendant Cleanwrap was bidding on jobs or doing business with companies that Defendants Nemelka and Cleanwrap knew to be Tuff Wrap clients. (Doc. No. 1 ¶ 42.) Moreover, Defendants Nemelka and Cleanwrap have used the Tuff Wrap name as an internet search engine keyword, which drives Tuff Wrap customers to Cleanwrap's website. (Doc. No. 1 ¶ 46.)

In support of their competing positions, each party presented a witnesses at the June 10, 2011 hearing before this Court. Their testimony is summarized below. The Court finds that the testimony of the witness for Plaintiff is credible and supports the need for a preliminary injunction in this case.

A. Plaintiff's Witness: David Campbell

David Campbell testified that he is President of Tuff Wrap. (Transcript of Hearing, June 11, 2011 ("Hr'g Tr.") at 13:12-13.) Tuff Wrap provides dust and debris protection to the interior of a building by usually installing on the ceiling or roof of a building a temporary plastic reinforced barrier between a construction site and the plant operation. (Id. at 13:14-19.) Campbell first worked with interior protection in 1999 when a friend expressed a need to protect the interior of his plant during construction. (Id. at 13:22--14:13.) Over the next four or five years, Campbell developed "the Tuff Wrap," which is a method of applying plastic material to the site without making any holes in the ...


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