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Inc. v. North Star Exteriors, LLC

United States District Court, E.D. Pennsylvania

August 1, 2018

123 EXTERIORS, INC. Plaintiff
NORTH STAR EXTERIORS, LLC, et al. Defendants




         Before this Court is a motion to dismiss the complaint for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6) filed by Defendants Jeffrey Hopkins (“Defendant Hopkins”) and North Star Exteriors, LLC (“Defendant North Star”), (collectively, “Moving Defendants”). The basis for the motion centers on Moving Defendants' reliance on a forum selection provision in the employment agreement between 123 Exteriors, Inc. (“Plaintiff”) and Defendant Hopkins, which provides that any claim arising out of, or in connection to, the employment agreement is subject to the sole jurisdiction of the state courts of the State of Missouri. [ECF 27]. Moving Defendants also seek dismissal on the grounds that Plaintiff has failed to adequately plead several of the claims. Plaintiff has opposed the motion. [ECF 28].

         The issues raised in the motion have been fully briefed and are ripe for consideration. For the reasons stated herein, Moving Defendants' motion to dismiss is granted, in part, and denied in part.


         When ruling on Moving Defendants' motion to dismiss, this Court accepts as true the relevant allegations in Plaintiff's complaint and attachments. Briefly, these facts are as follows:

Plaintiff is an Illinois corporation registered to do business in Missouri with a principal place of business located in St. Louis County, Missouri. (Compl. ¶1). Defendant Hopkins is a resident of Pennsylvania. (Id. at ¶3). Defendant North Star is a Pennsylvania limited liability company that is owned and operated by Defendant Hopkins, with its principal place of business located in Ottsville, Pennsylvania. (Id. at ¶2). According to Plaintiff, Defendant Hopkins covertly formed North Star on January 29, 2016, while still employed by Plaintiff, with the intent to defraud, gain an economic advantage over and unlawfully compete directly with Plaintiff. (Id. at ¶58). Defendant North Star is engaged in virtually an identical business and offers the identical services as Plaintiff. (Id. at ¶61).
Plaintiff is in the business of providing exterior insurance restoration in the States of Missouri, Illinois, Iowa, Nebraska, Ohio, Pennsylvania, and Wisconsin. (Id. at ¶11). Defendant Hopkins began working for Plaintiff in April, 2010, as a sales representative in Plaintiff's office located in Allentown, Pennsylvania. (Id. at ¶12). After considerable development, training, and investment by Plaintiff, Hopkins was promoted to General Manager of the Pennsylvania office. (Id. at ¶13).
As a General Manager, Defendant Hopkins' duties and responsibilities included, inter alia, oversight of the overall day-to-day operations and management of the Pennsylvania office, hiring, training, and managing sales representatives/agents, customer service, interacting with Plaintiff's customers, project management, financial success of the office, executing Plaintiff's business methods and operations, deriving and implementing marketing and sales strategies, attending regular meetings related to Plaintiff's confidential business model, strategic planning, competitive intelligence, strategic plans to grow and improve business in the Pennsylvania market, and maintaining continuous customer and referral relationships and goodwill on Plaintiff's behalf. (Id. at ¶16). In order for Defendant Hopkins to perform these job duties, Plaintiff gave Defendant Hopkins access to and allowed him use of Plaintiff's confidential, competitively-valuable information including, inter alia, identification of Plaintiff's actual customers and key contacts, training and instructional materials, marketing and sale strategies, promotional materials, bidding techniques and procedures, Plaintiff's established pipeline of “qualified” customers and key contacts, customer preferences, identification of referral sources, service and business manuals, financial records (including vendor relationships and agreements, fixed and variable costs, profit margins) related to the overall operations and management of Plaintiff's business, all of which allegedly provide Plaintiff a significant competitive advantage in the marketplace for the services it provides. (Id. at ¶17). Plaintiff alleges that this information constitutes confidential and/or proprietary information. (Id.).

         Defendant Hopkins entered into an Employment Agreement and Agreement Not to Compete (the “Employment Agreement”) with Plaintiff. (Id. at ¶18). The Employment Agreement contains a confidentiality provision which prohibits the disclosure of Plaintiff's trade secrets and confidential information, and reads as:

General Manager will keep in strict confidence, and will not, directly or indirectly at any time during or after his employment with the Company, disclose, furnish, disseminate, make available, or except in the course of performing his duties of employment hereunder or as may be required by law, use any trade secrets or confidential business and technical information of the Company, its customers or vendors, without limitation as to when or how General Manager may have acquired such information.
Such confidential information shall include, without limitation, the Company's unique selling methods and business techniques, training, service and business manuals, promotional materials, training courses and other training and instructional materials, vendor and product information, customer and prospective customer lists, other customer and prospective customer information and other business information, to the extent not otherwise generally known in the marketplace in which the Company competes. General Manager specifically acknowledges that all such confidential information, whether reduced to writing, maintained on any form of electronic media, or maintained in the mind or memory of General Manager and whether compiled by the Company, and/or General Manager, derives independent economic value from not being readily known to or ascertainable by proper means by others who can obtain economic value from its disclosure or use, that reasonable efforts have been made by the Company to maintain the secrecy of such information, that such information is the sole property of the Company and that any retention and use of such information by General Manager during his employment with the Company (except in the course of performing his duties and obligations hereunder) or after the termination of his employment shall constitute a misappropriation of the Company's trade secrets.

(Id. at ¶19). The Employment Agreement also contained non-competition and non-solicitation restrictive covenants. (Id. at ¶¶20-22). It also contained the following venue selection clause:

Jurisdiction. The courts of the State of Missouri shall have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute regarding the existence, validity or termination of this Agreement). (See ECF 1-1 at p. 8).
On April 6, 2016, Defendant voluntarily resigned and misrepresented to Plaintiff that he was going to work for his mother-in-law in an unrelated business and would fully honor the terms of his Employment Agreement. (Id. at ¶25). Based on Defendant Hopkins' re-affirmation of the terms of his Employment Agreement, Plaintiff allowed Defendant Hopkins to continue his employment for a two week period. (Id.). On April 14, 2016, Plaintiff was informed by a former sales representative that Defendant Hopkins had formed an exterior restoration business and was actively competing against Plaintiff. (Id. at ¶26). Plaintiff then discovered that Defendant Hopkins, while still employed and receiving compensation from Plaintiff, had placed signs for his directly competitive business, North Star Exteriors, at numerous locations within fifty miles of Plaintiff's Pennsylvania office, including in the yards of Plaintiff's actual customers, prospective customers, and business leads. (Id. at ¶27). Upon learning of this, Plaintiff immediately terminated Defendant Hopkins' employment. (Id. at ¶28).
Plaintiff alleges that since Defendant Hopkins left its employment, Defendant Hopkins, in conjunction with the other defendants, including North Star, has unlawfully misappropriated Plaintiff's confidential and proprietary information for financial gain in violation of the Defend Trade Secrets Act, ...

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