Ahern Rentals Inc. v. Young

• Court: District Court, D. Nevada
• Decided: March 5, 2024
• Docket: 2:21-cv-02190
• Status: Unknown

Opinion

1 UNITED STATES DISTRICT COURT

2 DISTRICT OF NEVADA

3 AHERN RENTALS, INC., Case No. 2:21-cv-02190-ART-BNW

4 Plaintiff, ORDER v. 5 JOHN MATTHEW YOUNG, 6 Defendant. 7 8 This dispute centers on the enforceability and alleged breach of certain 9 restrictive covenants in the employment agreement between Plaintiff Ahern 10 Rentals, Inc., and Defendant John Matthew Young. This case began as two 11 separate state court actions. One, filed by Defendant against Plaintiff, originated 12 in North Carolina state court, and was subsequently removed to federal court in 13 North Carolina and then transferred to the District of Nevada. The other, filed 14 by Plaintiff against Defendant, originated in Nevada state court, and was 15 subsequently removed to this Court. The cases were ultimately consolidated 16 into this action. (ECF No. 54.) 17 Now pending before the Court are several motions from both parties. 18 Defendant has moved for summary judgment on both his own claims and 19 Plaintiff’s claims. (ECF No. 63.) Plaintiff has responded with two motions for 20 summary judgment, one related to its own claims (ECF No. 65), and the other 21 on Defendant’s claims (ECF No. 68). Related to these cross motions for 22 summary judgment are three motions to seal documents. Two were filed by 23 Plaintiff (ECF Nos. 66, 69), and the other was filed by Defendant (ECF No. 76). 24 Finally, Defendant filed two motions for leave to file a document to supplement 25 his prior briefing on the summary judgment motions. (ECF Nos. 87, 88.) 26 Good cause appearing, the Court grants each of the motions to seal. (ECF 27 Nos. 66, 69, 76.) For the reasons stated, the Court denies Defendant’s two 28 motions for leave to file supplements to his summary judgment briefing. (ECF 1 Nos. 87, 88.) For the reasons stated, the Court grants Plaintiff’s motion for 2 summary judgment on Defendant’s claims. (ECF No. 68.) The remaining 3 motions for summary judgment are each granted in part and denied in part, as 4 outlined below. (ECF Nos. 63, 65.) 5 I. Facts 6 At all times relevant to the motions before the Court, Plaintiff Ahern 7 Rentals, Inc., rented heavy industrial and construction equipment to customers 8 in a variety of industries. (ECF No. 1-1 (“Complaint”); ECF No. 5-2 (“Vawter 9 Declaration”).) Defendant John Matthew Young started working for Plaintiff in 10 August 2019 as a sales representative at Plaintiff’s branch in Raleigh, North 11 Carolina. (ECF No. 63-1 (“Young Declaration”); ECF No. 63-2 (“Ahern Rule 12 30(b)(6) Deposition”).) As part of the hiring process, Defendant entered into a 13 Non-Competition, Non-Solicitation and Non-Disclosure Agreement (“Agreement”) 14 with Plaintiff. (ECF No. 65-6.) The Agreement provides that it “shall be governed 15 and construed in accordance with the laws of the State of Nevada.” (Agreement 16 at § 8.1.) This litigation centers on four provisions in the Agreement. 17 First, the Agreement contains a non-solicitation provision: 18 2.1. Employee covenants that during the period that he/she is employed by Company and thereafter for the 12-month period 19 immediately following the date on which Employee’s employment with Company is terminated . . . he/she will not . . . except on 20 behalf of the Company, directly or indirectly: 21 A. attempt in any manner to solicit from any Customer . . . business of the type performed by Company or to persuade any 22 Customer to cease to do business or to reduce the amount of business which any such Customer has customarily done or is 23 reasonably expected to do with Company, whether or not the relationship between such member of Company and such client 24 was originally established in whole or in part through his/her 25 efforts; 26 (Agreement at § 2.1.) The Agreement defines “Customer” as used in the non- 27 solicitation agreement: 28 1 of Termination; (B) any person or entity who was a customer of 2 Company at any time during the one-year period immediately preceding the Date of Termination; (C) any prospective customers to 3 whom Company made a new business presentation (or similar offering of services) at any time during the two-year period 4 immediately preceding the Date of Termination; and (D) any prospective customer to whom Company made a new business 5 presentation (or similar offering of services) at any time within six 6 months after the Date of Termination (but only if the initial discussions between Company and such prospective client relating 7 to the rendering of services occurred prior to the Date of Termination, and only if employees of Company participated in 8 such discussion or the preparation of such solicitation). 9 (Agreement at § 2.3.) 10 Second, the Agreement includes a non-competition provision: 11 If the Employee’s employment with the Company is terminated . . . 12 whether or not such termination is initiated by the Company or by the Employee, Employee covenants that during the period that 13 he/she is employed by Company and thereafter for the 12-month 14 period immediately following the Date of Termination, he/she will not, as an individual, consultant, partner, member, shareholder, 15 independent contractor, representative, or otherwise, or in association with any other person, business or enterprise, except 16 on behalf of Company, directly or indirectly, be employed, retained 17 or otherwise provide any consulting, contracting, sales or other services that are the same or similar services that Employee 18 provided at the Company to any person or entity who or which then competes with Company to any extent within the Restricted Area. 19 (Agreement at § 2.2.) The Agreement defines “Restricted Area” as used in the 20 non-competition provision: 21 The "Restricted Area" shall consist of a 100 mile radius of any of 22 Company's stores in or for which Employee performed services, or had management or sales responsibilities at any time during the 23 12-month period immediately preceding the Date of Termination and in which the Company has established customer contacts and 24 good will. 25 (Agreement at § 2.4.) Relevant to both the non-solicitation and non-competition 26 provisions is a term providing how time periods in the Agreement are computed: 27 All time periods in this Agreement shall be computed by excluding 28 from such computation any time during which Employee is or was 1 which there is pending in any court of competent jurisdiction any 2 action (including any appeal from any final judgment) brought by any person or entity, whether or not a party to this Agreement, in 3 which action Company seeks to enforce the agreements and covenants in this Agreement or in which any person or entity 4 contests the validity of such agreements and covenants or their enforceability or seeks to avoid their performance or enforcement. 5 (Agreement at § 2.5.) 6 Third, the Agreement includes a non-disclosure provision: 7 Employee shall not at any time: (A) disclose any Confidential 8 Information or Trade Secret without the express written consent of 9 Company; (B) utilize any Confidential Information or Trade Secret for his/her own benefit, or for the benefit of any third party; or (C) 10 remove or take personal possession of any Confidential Information or Trade Secret from Company’s premises, systems, servers, or 11 other location, physical or electronic, without the express written 12 consent of Company. Employee acknowledges and agrees that all memoranda, manuals, reports, plans, designs, notes, records and 13 other documents compiled or produced by him/her or made available to him/her pertaining to the business of Company and/or 14 the Customers (whether or not the same constitutes Confidential 15 Information or a Trade Secret), shall be and remain the property of Company, shall remain subject at all times to Company’s sole 16 discretion and control, and all originals and copies of the same shall be delivered immediately to Company on the Date of 17 Termination or, upon request, at any other time. 18 (Agreement at § 3.2.) Section 3 of the Agreement includes additional terms 19 bearing on the non-disclosure provision. For example, “Employee acknowledges 20 and agrees that the Confidential Information and Trade Secrets constitute 21 valuable goodwill of Company and are owned, and shall continue to be owned, 22 solely by Company and/or customers.” (Agreement at § 3.1.) The Agreement 23 defines “Confidential Information” as “any information . . . that is not generally 24 known to the public, including, but not limited to . . . agreements and/or 25 contracts with Customers . . . Customer preferences . . . and information about 26 or received from Customers and other entities with which Company does 27 business.” (Agreement at § 3.4.) “Trade Secrets” are defined as information 28 1 which “Company derives independent economic value, actual or potential, 2 from,” is “not generally known to, and is not readily ascertainable by, persons 3 who can obtain economic value from its disclosure or use,” and is “the subject 4 of Company's efforts to maintain its secrecy that are reasonable under the 5 circumstances, regardless of whether such information may be protected as a 6 trade secret under applicable law.” (Id.) Finally, the Agreement provides that 7 employees must return all documents containing Confidential Information and 8 Trade Secrets and cease accessing any of the Company’s computers and other 9 equipment no later than the date of termination. (Agreement at § 3.5.) 10 Fourth, the Agreement provides for liquidated damages: 11 Employee agrees that in the event of a breach of any terms of this Agreement . . . the damages will be difficult if not impossible to 12 ascertain. It is therefore agreed that if Employee commits a breach or, in Company's reasonable judgment, is about to commit a 13 breach, . . . Company shall be entitled to: . . . liquidated damages in 14 the amount of TWO HUNDRED FIFTY THOUSAND DOLLARS AND 00/100THS ($250,000.00). The Parties agree that the liquidated 15 damages provision provided for herein are reasonable in amount and not a penalty. In addition, Company may take all such other 16 actions and remedies available to it under law or in equity and shall be entitled to such money damages insofar as they can be 17 reasonably determined, including, without limitation, all reasonable 18 costs and attorneys' fees (including those of Company's in-house attorneys) incurred by Company in enforcing the provisions of this 19 Agreement. 20 (Agreement at § 5.) The Agreement is signed and dated by Defendant and 21 Defendant’s manager. 22 The parties disagree over the geographic scope of Defendant’s sales 23 responsibilities while he was an employee of Plaintiff’s. According to Defendant, 24 his employment “was account focused and based exclusively out of Ahern’s 25 branch in Raleigh, North Carolina,” and his “area of responsibility was 26 Southwest Raleigh.” (Young Declaration at ¶ 4.) In his deposition, Defendant 27 states that he never worked at Plaintiff’s Charlotte branch. (ECF No. 63-3 (“First 28 1 Young Deposition”) at 79-80.) 2 Plaintiff characterizes Defendant’s sales responsibilities differently. 3 According to Plaintiff, Ahern does not use a territory-based model but assigns 4 its sales representatives an account base. (Ahern Rule 30(b)(6) Deposition at 12- 5 13.) Because of Ahern’s model, sales representatives are expected to serve 6 customers across the country. (Id.) 7 The record reflects that Defendant served customers in North Carolina, 8 South Carolina, Texas, Georgia, Minnesota, Oregon, and California. (Id. at 14- 9 15.) Defendant testified that he rented equipment to Sky View Steel, MTZ 10 Welding, and Cubas Welding while at Ahern. (First Young Deposition at 20-25.) 11 The record also reflects that Defendant served customers located in Charlotte, 12 North Carolina, and rented equipment for jobsites in Charlotte to customers 13 situated in other states. (ECF No. 67-2; ECF No. 67-3; ECF No. 67-6; First 14 Young Deposition at 44-45.) Defendant testified that he only visited Ahern’s 15 Charlotte store two or three times during his employment with Ahern. (First 16 Young Deposition at 79-80.) Plaintiff’s records reflect that less than 1% of the 17 316 customers Defendant serviced while at Ahern were located in Charlotte. 18 (ECF No. 63-7.) 19 In August of 2020, Defendant was involved in a verbal dispute with his 20 manager and frustratedly stated that he might leave the company and take his 21 revenue with him. (ECF No. 65-20; First Young Deposition at 56-57.) Defendant 22 signed a record of the conversation that Ahern created and did not dispute the 23 record. (ECF No. 65-20.) In the months following this dispute, Defendant began 24 communicating with one of Plaintiff’s competitors, JGR Equipment Rentals and 25 Sales (“JGR”), about potential job opportunities. (First Young Deposition at 56- 26 57.) 27 In March of 2021, Defendant was involved in another verbal conflict with 28 Ahern management. (First Young Deposition at 58-59, 76-77; Young 1 Declaration at ¶ 6.) According to Defendant, Ahern’s regional vice president 2 solicited feedback on how Ahern could improve its business operations; after 3 Defendant described areas for improvement, he was told that Ahern may not be 4 the best place for him to work. (Id.) Following this conflict, Defendant began 5 speaking with an employee of an Ahern competitor, EquipmentShare, about 6 employment opportunities. (ECF No. 65-23 (“Second Young Deposition”) at 45; 7 ECF 65-24 (“Foster Deposition”) at 34-36.) 8 Defendant took several other relevant actions following the March 9 conflict. In a declaration, Defendant states that he requested a copy of his Non- 10 Competition Agreement with Ahern to ensure that he was complying with all 11 restrictive covenants. (Young Declaration at ¶ 7.) Young also created a 103-page 12 list of potential customer targets by taking screenshots of customer information 13 for every active Ahern customer in North Carolina. (First Young Deposition at 14 63-67, 75-77; ECF No. 67-7.) Defendant testified that the screenshots came 15 from Ahern’s password protected database. (First Young Deposition at 63-67, 16 75-77.) Defendant emailed this list to his personal email address. (Id.) 17 Defendant emailed several additional documents from Ahern’s database 18 throughout the course of March 2021. (ECF No. 67-8; ECF No. 67-9; ECF No. 19 67-10; ECF No. 67-11.) 20 After reviewing the Non-Competition Agreement, Defendant began 21 exploring employment opportunities in the equipment rental industry in 22 Charlotte, which was more than 100 miles away from Ahern’s Raleigh location. 23 (Young Declaration at ¶ 7-9.) Defendant eventually received an employment 24 offer from JGR Equipment Rental & Sales as a sales representative in its 25 Charlotte branch. (First Young Deposition at 57-58, 66; ECF No. 65-21.) In 26 anticipation of accepting this offer, Defendant provided Plaintiff with two-weeks’ 27 notice of his resignation. (Young Declaration at ¶ 9; ECF No. 65-29) Ater 28 receiving Defendant’s notice, Plaintiff terminated Defendant’s employment 1 effective immediately. (Young Declaration at ¶ 9.) Plaintiff then sent letters to 2 Defendant and JGR describing the scope of the restrictive covenants in 3 Plaintiff’s contract with Ahern. (Young Declaration at ¶ 9; ECF No. 65-30.) After 4 delivery of these letters, Defendant’s employment with JGR never materialized. 5 (Young Declaration at ¶ 9.) 6 Around the same time Defendant’s employment with JGR fell apart, 7 EquipmentShare contacted Defendant to gauge his interest in working for a 8 branch in Charlotte that EquipmentShare was planning to open in the future. 9 (First Young Deposition at 14; Foster Deposition at 46-48, 115.) Defendant 10 received an official offer of employment to become a sales representative at 11 EquipmentShare after he provided EquipmentShare with the Non-Competition 12 Agreement. (Foster Deposition at 49-54.) Upon acceptance of the offer from 13 EquipmentShare, Defendant was instructed to refrain from going after his 14 former customers at Ahern, from using any of Ahern’s information, and from 15 otherwise violating the Non-Competition Agreement. (Foster Deposition at 57- 16 58.) 17 Defendant began working for EquipmentShare on May 28, 2021. (Young 18 First Deposition at 14.) At the time, EquipmentShare did not have a Charlotte 19 location, and Defendant was technically assigned to EquipmentShare’s location 20 near Charleston, South Carolina, more than 100 miles from Ahern’s Raleigh 21 store. (Foster Deposition at 115; Second Young Deposition at 30.) Defendant 22 primarily worked remotely out of his Charlotte apartment. (Second Young 23 Deposition at 30; Young Declaration at ¶ 9.) 24 The parties have starkly different versions of the events that took place in 25 the weeks after Defendant began working at EquipmentShare. Plaintiff contends 26 that Defendant directly solicited seven of his former customers from his time at 27 Ahern: Queens Welding, Cubas Welding, Environmental Holdings Group, Sky 28 View Steel, MTZ Welding, ARS Extreme Construction, and Phoinix 1 Construction. (ECF No. 65 at 16-19.) Defendant contends that while Cubas 2 Welding, MTZ Welding, and Sky View Steel were former customers of his at 3 Ahern, he did not directly solicit any of them, and that all three of the 4 companies contacted him first once he began working for EquipmentShare. 5 (ECF No. 63 at 8-11.) Defendant also argues that contact with Environmental 6 Holdings Group and Phoinix Construction were both initiated by the customers, 7 that contact with ARS Extreme Construction did not amount to solicitation, and 8 that Queens Welding was not a customer of his at Ahern. (ECF No. 73 at 17 9 n.5.) 10 On August 31, 2021, Plaintiff’s general counsel emailed 11 EquipmentShare’s general counsel alleging that Defendant’s employment with 12 EquipmentShare violated the Non-Competition Agreement. (Second Young 13 Deposition at 80-83; ECF No. 63-11.) Further, Plaintiff alleged that Defendant 14 had solicited Ahern customers on behalf of EquipmentShare. (ECF No. 63-11) 15 In response to Plaintiff’s allegations, EquipmentShare suspended Defendant 16 without pay in early September 2021. (Id.) 17 Following the suspension, Defendant filed suit in North Carolina state 18 court challenging the enforceability of the restrictive covenants in the Non- 19 Competition Agreement. (ECF No. 63-12.) Plaintiff commenced this litigation 20 against Young in Nevada state court asserting claims for (1) breach of contract; 21 (2) breach of implied covenant of good faith and fair dealing; (3) conversion; (4) 22 violation of the Nevada Trade Secrets Act; and (5) injunctive relief. (ECF No. 1- 23 1.) Both cases were removed to federal court, the North Carolina case was 24 transferred to Nevada, and then both were ultimately consolidated into this 25 action. (ECF Nos. 52, 54.) 26 Initially, Plaintiff sought a temporary restraining order (ECF No. 5), which 27 this Court granted (ECF No. 13), finding good cause to believe Defendant 28 breached his agreement with Plaintiff. Plaintiff’s request for a preliminary 1 injunction (ECF No. 6) was granted in part and denied in part, with the Court 2 enjoining Defendant from violating the non-disclosure provision but finding no 3 threat of irreparable harm from other alleged breaches given Defendant’s 4 suspension at Ahern (ECF No. 45). 5 Defendant then filed his motion for summary judgment, both on his 6 claims and on Plaintiff’s. (ECF No. 63). Plaintiff responded (ECF No. 72), and 7 Defendant replied (ECF No. 78.). 8 Plaintiff filed two summary judgment motions, one on its own claims 9 (ECF No. 65), and one on Defendant’s claims (ECF No. 68). Defendant 10 responded to both motions (ECF Nos. 73, 77). Plaintiff filed a consolidated reply 11 (ECF No. 82). 12 Related to these cross motions for summary judgment are three motions 13 to seal documents. Two were filed by Plaintiff (ECF Nos. 66, 69), and the other 14 was filed by Defendant (ECF No. 76). 15 Finally, Defendant filed two motions for leave to supplement his 16 oppositions to Plaintiff’s motions for summary judgment (ECF Nos. 87, 88). 17 Plaintiff responded (ECF No. 90), and Defendant replied (ECF No. 91, 92). 18 II. Summary Judgment Standard 19 Summary judgment is appropriate if the movant shows “there is no 20 genuine dispute as to any material fact and the movant is entitled to judgment 21 as a matter of law.” Fed. R. Civ. P. 56(a), (c). A fact is material if it “might affect 22 the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, 23 Inc., 477 U.S. 242, 248 (1986). A dispute is genuine if “the evidence is such that 24 a reasonable jury could return a verdict for the nonmoving party.” Id. 25 The party seeking summary judgment bears the initial burden of 26 informing the Court of the basis for its motion and identifying those portions of 27 the record that demonstrate the absence of a genuine issue of material fact. 28 Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). The burden then shifts to the 1 non-moving party to set forth specific facts demonstrating there is a genuine 2 issue of material fact for trial. Fairbank v. Wunderman Cato Johnson, 212 F.3d 3 528, 531 (9th Cir. 2000); Sonner v. Schwabe N. Am., Inc., 911 F.3d 989, 992 4 (9th Cir. 2018) (“To defeat summary judgment, the nonmoving party must 5 produce evidence of a genuine dispute of material fact that could satisfy its 6 burden at trial.”). The Court views the evidence and reasonable inferences in 7 the light most favorable to the non-moving party. James River Ins. Co. v. Hebert 8 Schenk, P.C., 523 F.3d 915, 920 (9th Cir. 2008). “When simultaneous cross- 9 motions for summary judgment on the same claim are before the Court, the 10 Court must consider the appropriate evidentiary material identified and 11 submitted in support of both motions, and in opposition to both motions, before 12 ruling on each of them.” Tulalip Tribes of Wash. v. Wash., 783 F.3d 1151, 1156 13 (9th Cir. 2015) (citation omitted). 14 III. Analysis 15 1. Summary Judgment on Plaintiff’s Claims 16 In his motion for summary judgment, Defendant argues that he is 17 entitled to summary judgment on Plaintiff’s breach of contract and breach of 18 the covenant of good faith and fair dealing causes of action related to the non- 19 competition and non-solicitation provisions for two reasons: the provisions are 20 overly broad and therefore unenforceable and, even if the provisions are 21 enforceable, Defendant did not violate them. Defendant further argues that he 22 is entitled to summary judgment on Plaintiff’s breach claims based on the 23 breach of the non-disclosure provision because Plaintiff has failed to present 24 evidence of damages. According to Defendant, the lack of evidence of damages 25 also should result in summary judgment in his favor on the conversion and 26 violation of the Nevada Trade Secrets Act claims. Finally, Defendant argues that 27 the liquidated damages clause is an unenforceable penalty and that he is 28 entitled to summary judgment on his affirmative defense on this issue. (ECF 1 Nos. 63, 73, 78.) 2 In response, Plaintiff contends that the non-competition and non- 3 solicitation provisions are valid and enforceable, and that Defendant breached 4 them through his employment with EquipmentShare and his alleged solicitation 5 of Ahern customers. Plaintiff also argues that summary judgment is proper in 6 its favor for breach of the non-disclosure provision, conversion, and violation of 7 the Nevada Trade Secrets Act. Finally, Plaintiff argues that the liquidated 8 damages clause is valid and enforceable. (ECF Nos. 65, 72, 82.) 9 As explained below, the Court finds the non-competition and non- 10 solicitation provisions overbroad. But because Nevada law requires courts to 11 revise a restrictive covenant when possible, the Court will revise each of these 12 covenants to not impose undue hardship on Defendant. After revising each of 13 these provisions, the Court grants summary judgment for Defendant as to the 14 breach of the non-competition provision. The Court finds triable issues of fact 15 as to whether Defendant breached the revised non-solicitation provision. The 16 Court also finds triable issues of fact as to damages flowing from Defendant’s 17 breach of the non-disclosure provision and as to damages resulting from 18 Plaintiff’s claims for conversion and violation of the Nevada Trade Secrets Act. 19 Finally, the Court finds the liquidated damages clause to be an unenforceable 20 penalty and grants summary judgment on Defendant’s affirmative defense 21 related to that issue. 22 a. Contract Claims 23 The Agreement provides that it “shall be governed and construed in 24 accordance with the laws of the State of Nevada.” (Agreement at § 8.1.) In 25 Nevada, “the plaintiff in a breach of contract action [must] show (1) the 26 existence of a valid contract, (2) a breach by the defendant, and (3) damage as a 27 result of the breach.” Saini v. Int'l Game Tech., 434 F. Supp. 2d 913, 919–20 (D. 28 Nev. 2006) (citing Richardson v. Jones, 1 Nev. 405, 408 (1865)). To establish a 1 claim for breach of the implied covenants of good faith and fair dealing, a 2 plaintiff must prove: (1) the existence of a contract between the parties; (2) that 3 defendant breached its duty of good faith and fair dealing by acting in a manner 4 unfaithful to the purpose of the contract; and (3) the plaintiff's justified 5 expectations under the contract were denied. See Shaw v. CitiMortgage, Inc., 6 201 F. Supp. 3d 1222, 1251 (D. Nev. 2016) (citing Perry v. Jordan, 900 P.2d 7 335, 338 (Nev. 1995)). A party breaches the implied covenants of good faith and 8 fair dealing by engaging in conduct that “deliberately countervenes the intention 9 and spirit of the contract.” Id. (quoting Hilton Hotels Corp., v. Butch Lewis Prod. 10 Inc., 808 P.2d 919, 923-24 (Nev. 1991)). 11 Plaintiff has alleged breach of contract and breach of the implied 12 covenants of good faith and fair dealing claims against Defendant related to 13 three provisions in the Agreement: 1) the non-competitions provision; 2) the 14 non-solicitation provision; and 3) the non-disclosure provision. Both Plaintiff 15 and Defendant have moved for summary judgment on these claims. Neither 16 party contests that existence of a valid contract, so the Court will only address 17 breach and damages and address each of the breach claims in turn. 18 i. Breach of the Non-Competition Provision 19 Covenants to not compete are governed by NRS 163.195. Such covenants 20 are “void and unenforceable” unless they are “supported by valuable 21 consideration,” do not “impose any restraint that is greater than is required for 22 the protection of the employer for whose benefit the restraint is imposed,” do 23 not “impose any undue hardship on the employee,” and are “appropriate in 24 relation to the valuable consideration supporting the noncompetition covenant.” 25 NRS 163.195(1)(a-d). The statute also provides that if a court finds that a 26 restrictive covenant is unreasonable or imposes undue hardship on the 27 employee, “the court shall revise the covenant to the extent necessary and 28 enforce the covenant as revised.” NRS 163.195(6). 1 The statutory language mirrors Nevada Supreme Court cases discussing 2 restrictive covenants. “An agreement on the part of an employee not to compete 3 with his employer after termination of the employment is in restraint of trade 4 and will not be enforced in accordance with its terms unless the same are 5 reasonable.” Hansen v. Edwards, 426 P.2d 792, 793 (Nev. 1967). The test for 6 reasonableness of a restrictive covenant boils down to “whether it imposes upon 7 the employee any greater restraint than is reasonably necessary to protect the 8 business and good will of the employer.” Id. “A restraint of trade is 9 unreasonable . . . if it is greater than is required for the protection of the person 10 for whose benefit the restraint is imposed or imposes undue hardship upon the 11 person restricted.” Id. “The amount of time the covenant lasts, the territory it 12 covers, and the hardship imposed upon the person restricted are factors for the 13 court to consider in determining whether such a covenant is reasonable.” Jones 14 v. Deeter, 913 P.2d 1272, 1275 (Nev. 1996). “[B]ecause the loss of a person's 15 livelihood is a very serious matter, post employment anti-competitive covenants 16 are scrutinized with greater care.” Ellis v. McDaniel, 596 P.2d 222, 224 (Nev. 17 1979). If a restrictive covenant is found to be unreasonable, it is unenforceable, 18 and therefore cannot be breached. Jones, 913 P.2d at 1275. 19 The reasonableness test must be applied to three elements of the non- 20 competition provision at issue here: the duration, the scope of activity, and the 21 territory covered. Beginning with duration, the Agreement states that the non- 22 competition restrictions apply “for the 12-month period immediately following 23 the Date of Termination.” (Agreement at § 2.2.) Generally, a one-year period for 24 restrictive covenants is reasonable. See Ellis, 596 P.2d at 224 (finding a 25 duration of two years reasonable); Hansen, 426 P.2d at 794 (finding a duration 26 of one year reasonable). Thus, the Court finds the one-year term of duration for 27 the non-competition provision of the Agreement to be valid and enforceable. 28 The Agreement also restricts Defendant from engaging in certain activities 1 and behavior. Specifically, it provides that Defendant “will not . . . directly or 2 indirectly, be employed, retained or otherwise provide any consulting, 3 contracting, sales or other services that are the same or similar services that 4 Employee provided at the Company to any person or entity [that] competes with 5 Company . . . within the Restricted Area.” (Agreement at § 2.2.) As written, this 6 provision is unreasonable and places an undue hardship on Defendant because 7 it restricts Defendant from all employment with Ahern competitors, not just 8 employment providing “services that are the same or similar services” that 9 Defendant provided to Ahern. 10 The Nevada Supreme Court found a similar restriction unreasonable in 11 Golden Rd. Motor Inn, Inc. v. Islam, holding that a term prohibiting all 12 employment in an industry was overly broad because “it extends beyond what is 13 necessary to protect [the employer’s] interests.” 376 P.3d 151, 155 (Nev. 2016), 14 superseded by statute on other grounds, NRS 613.195(6), as recognized in Tough 15 Turtle Turf, LLC v. Scott, 537 P.3d 883, 886–87 (Nev. 2023). The Nevada 16 Supreme Court also found that the restriction placed an undue hardship on the 17 employee because it “severely restrict[ed] [his] ability to be gainfully employed.” 18 Id. 19 Because the restriction here, just like in Golden Rd., prohibits Defendant 20 from all employment with competitors in the Restricted Area, the Court finds 21 that it is unreasonably broad. Under NRS 613.195(6), a “district court must 22 modify an overbroad noncompete covenant when possible.” Tough Turtle Turf, 23 537 P.3d at 887. Here, the offending language may easily be stricken from the 24 non-competition provision to cure the overbreadth. The Court therefore strikes 25 the words “be employed, retained or otherwise” that follow the word “indirectly” 26 and precede the word “provide” in Section 2.2 of the Agreement. This revision 27 relieves the undue hardship on Defendant and reasonably protects Plaintiff’s 28 business interests. Under this revision, Defendant may pursue employment 1 with Ahern competitors in the Restricted Area only if the employment is not 2 related to the same services he performed for Ahern. 3 Finally, the geographic scope of the restriction consists of “a 100 mile 4 radius of any of Company's stores in or for which Employee performed services, 5 or had management or sales responsibilities at any time during the 12-month 6 period immediately preceding the Date of Termination and in which the 7 Company has established customer contacts and good will.” (Agreement at § 8 2.4.) As written, this restriction would appear to prohibit Defendant from 9 working as sales representative within 100 miles of any Ahern store that 10 Defendant sold rental equipment from during the 12-month period immediately 11 preceding his termination. Importantly, this includes more than just the Raleigh 12 branch where Defendant was assigned; it includes every store across the 13 country that serviced Defendant’s clients on contracts Defendant sold. It 14 appears from the record that the Restricted Area therefore includes area in over 15 twenty states, including states far from North Carolina like California, 16 Minnesota, and Oregon. (ECF No. 63-7; Ahern Rule 30(b)(6) Deposition at 12- 17 15.) The Court finds that the geographic scope of this restriction is not 18 necessary to protect Plaintiff’s business interests and places undue hardship on 19 Defendant. It is thus overbroad and unenforceable. 20 Plaintiff, unlike other rental companies, assigns customers to its sales 21 representatives and provides its employees with considerable amounts of 22 confidential information and trade secrets about their assigned customers. 23 (Ahern Rule 30(b)(6) Deposition at 12-15, 23, 33.) Sales representatives develop 24 a rapport with specific entities, learn the intricacies of an entity’s operations 25 and its specific needs, and may service that entity in many cities across the 26 country. (Id.) Plaintiff’s stated business interests are adequately protected by 27 other restrictive covenants in the Agreement prohibiting direct solicitation of 28 Ahern customers and the use of Ahern confidential information. The geographic 1 scope is therefore unnecessary to protect Ahern’s business interests considering 2 the Agreement as a whole. 3 The geographic scope also severely restricts Defendant’s ability to be 4 gainfully employed. See Golden Rd. Motor Inn, Inc., 376 P.3d at 155. Defendant 5 would need to either leave his chosen industry and profession or move far from 6 his home to a narrow choice of states. Given that Plaintiff’s business interests 7 are adequately protected by other provisions of the Agreement, the undue 8 hardship the geographic scope places on Defendant is unreasonable. The 9 geographic scope is therefore overbroad and unenforceable. 10 As above, this Court is tasked by statute with revising the overbroad 11 geographic scope. NRS 613.195(6). A reasonable revision here must both relieve 12 the undue hardship on Defendant and be no greater than necessary for the 13 employer’s protection. Limiting the geographic scope to a 100-mile radius 14 surrounding Raleigh, the location where Defendant was physically present and 15 rented the highest percentage of equipment relative to other locations, removes 16 the undue hardship on Defendant. It also protects Plaintiff’s business interests 17 by ensuring that Defendant will not compete with it in the area where 18 Defendant’s connections with Ahern customers are most developed and most 19 likely to harm Ahern’s business interests. The Court therefore revises Section 20 2.4 of the Agreement to read “a 100 mile radius of any of Company's stores 21 where Employee was assigned at any time during the 12-month period 22 immediately preceding the Date of Termination.” 23 The question remaining is whether there are any triable issues of fact as 24 to whether Defendant breached the revised non-competition provision. There is 25 no dispute that Defendant sought employment providing the same services he 26 provided at Ahern within twelve months of his termination at Ahern. There is 27 also no dispute that Defendant’s employment was more than 100 miles from 28 Ahern’s Raleigh, North Carolina branch. Defendant is therefore not in breach of 1 the revised non-competition provision. The Court grants summary judgment to 2 Defendant as to Plaintiff’s claim of breach of the non-competition provision.1 3 The Court will also grant summary judgment to Defendant on Plaintiff’s 4 claim for breach of the implied covenant of good faith and fair dealing as applied 5 to the non-competition provision because the Court finds that Defendant acted 6 in good faith by pursuing employment over 100 miles away from Raleigh. See 7 Consol. Generator-Nevada, Inc. v. Cummins Engine Co., 971 P.2d 1251, 1256 8 (Nev. 1998) (holding that good faith is a question of fact). 9 ii. Breach of the Non-Solicitation Provision 10 Non-solicitation provisions are governed by NRS 613.195(2). The statute 11 provides that an employer may not restrict a former employee from providing 12 service to a former customer if: “(a) The former employee did not solicit the 13 former customer or client; (b) The customer or client voluntarily chose to leave 14 and seek services from the former employee; and (c) The former employee is 15 otherwise complying with the limitations in the covenant.” NRS 613.195(2)(a-c). 16 The Agreement provides that for 12 months following the termination of 17 an employee’s employment, the employee may not “attempt in any manner to 18 solicit from any Customer . . . business of the type performed by Company or to 19 persuade any Customer to cease to do business . . . with Company.” (Agreement 20 at § 2.1.) The definition of customer includes any person or entity who was a 21 customer at the time of termination or in the one-year period immediately 22 preceding termination. (Agreement at § 2.3.) The definition also includes some 23 prospective customers. (Id.) 24 As written, the portion of the non-solicitation provision restricting 25

26 1 Even if the Court enforced the provision as written and found Defendant in breach by virtue of his employment with EquipmentShare in Charlotte, there are still triable 27 issues of fact precluding summary judgment on the issue of damages flowing from the breach. See Section III.1.a.ii. infra. 28 1 Defendant from engaging in certain activities complies with NRS 613.195(2). It 2 only prohibits Defendant from attempting to solicit business from former 3 customers or to persuade customers to cease to do business with Ahern. The 4 statute allows restrictions on solicitation of former customers; what the statute 5 prohibits are restrictions that prevent former employees from speaking with 6 former customers, even if the customers contact the employee first. See NRS 7 613.195(2). This restriction does not conflict with the statute and is therefore 8 valid and enforceable. 9 The Agreement’s definition of “Customer,” though, imposes a restraint 10 that is greater than necessary for the protection of Plaintiff’s interests. Again, 11 Plaintiff assigns customers to its sales representatives and provides its 12 employees with considerable amounts of confidential information and trade 13 secrets about their assigned customers. (Ahern Rule 30(b)(6) Deposition at 12- 14 15, 23, 33.) Sales representatives develop a rapport with specific entities, learn 15 the intricacies of an entity’s operations and its specific needs, and may service 16 that entity in many cities across the country. (Id.) Plaintiff’s business interests 17 are focused on protection from ex-employees soliciting formerly assigned 18 customers, using confidential information, rapport, and knowledge against 19 Ahern that was gained from serving the customer on behalf of Ahern. Therefore, 20 the non-solicitation provision need only restrict Defendant from soliciting 21 customers that he had contacts with while at Ahern, not all Ahern customers, 22 to adequately protect Plaintiff’s business interests. 23 Similarly, an overbroad definition of “Customer” also places undue 24 hardship on Defendant. As currently written, the restriction would require 25 Defendant to confirm that every customer he reaches out to about equipment 26 rentals while at his new company was not a “Customer” of Ahern’s, even if 27 Defendant himself had zero contact with the customer while employed at Ahern. 28 With no established process to check on a potential customer’s status with 1 Ahern, this restriction limits Defendant’s ability to be gainfully employed as a 2 commission-based sales representative. See Golden Rd. Motor Inn, Inc., 376 P.3d 3 at 155. Defendant’s sales activities will be constantly undermined by fear of 4 breaching the non-solicitation provision, and Defendant will not be able to rely 5 on any personal knowledge to avoid a breach. Limiting the definition of 6 “Customer” in the non-solicitation provision to customers that Defendant had 7 contact with during his time at Ahern relieves the undue hardship on 8 Defendant. 9 The Court therefore finds that the definition of “Customer” in the 10 Agreement is overbroad and unenforceable and determines that it must revise 11 the definition to eliminate the overbreadth. NRS 613.195(6). As explained above, 12 an appropriate revision that is not greater than necessary to protect Plaintiff’s 13 business interests and relieves undue hardship on Defendant is to limit the 14 definition of “Customer” to only include those customers that Defendant had 15 personal contact with while at Ahern. The Court will thus revise Section 2.3 of 16 the Agreement to include language limiting the definition of Customer to only 17 include those customers of Ahern that fall under the current definition and 18 “that Employee had personal contacts with while employed at Company.” 19 The remaining question is whether there are triable issues of fact as to 20 breach of the revised non-solicitation provision. Both Plaintiff and Defendant 21 have pointed to facts in the record supporting their claims for summary 22 judgment on breach of this provision. Defendant testified that during his time 23 at EquipmentShare, he did business with three of his former customers at 24 Ahern: Sky View Steel, MTZ Welding, and Cubas Welding. (Young First 25 Deposition at 20-21.) Defendant further testified that he did not solicit any of 26 these former customers and that each of them initiated contact. (Id. at 22-24.) 27 To substantiate this claim, Defendant points to testimony from a Sky View Steel 28 employee characterizing her interactions with Defendant as friendly, based on a 1 personal relationship, and not solicitous. (ECF No. 63-10 at 16-17.) Defendant 2 further testified that the only other Ahern customer he contacted was 3 Environmental Holdings Group (“EHG”); it is unclear from his testimony if that 4 company was one of his former customers or just an Ahern customer. (Young 5 First Deposition at 25-26.) Defendant stated that EHG initiated contact with 6 him on his personal cell phone before he visited their office. (Id.) 7 Plaintiff identifies three additional companies that it claims Defendant 8 solicited in violation of the non-solicitation provisions: Queens Welding, ARS 9 Extreme Construction, and Phoinix Welding. In his deposition, Defendant 10 disputed that Queens was a previous customer of his at Ahern. (Id. at 53-54.) 11 Plaintiff submitted emails sent by Defendant to ARS Extreme Construction and 12 Phoinix Welding that amount to solicitation. (ECF Nos. 67-34, 67-35.) 13 Defendant has not pointed to no evidence in the record refuting that ARS 14 Extreme Construction and Phoinix Welding are former customers or that 15 Defendant initiated contact with them. 16 Plaintiff points to communications Defendant made to Ahern customers 17 while at EquipmentShare and to subsequent orders with EquipmentShare to 18 support its motion for summary judgment on breach of the non-solicitation 19 provisions. For example, Plaintiff cites to communications and orders pertaining 20 to Queens Welding, Cubas Welding, EHG, and Skyview Steel. (ECF Nos. 67-13– 21 67-24.) Plaintiff cites similar communications and orders pertaining to MTZ 22 Welding. (ECF Nos. 67-28–67-33.) And, as mentioned above, Plaintiff cites two 23 emails from Defendant to ARS Extreme Construction and Phoinix Welding that 24 amount to solicitation. (ECF Nos. 67-34, 67-35.) 25 Viewing the evidence in the light most favorable to each non-moving party 26 and resolving all reasonable inferences in the non-moving party’s favor, the 27 Court finds triable issues of fact as to whether Defendant’s communications 28 and dealings with Queens Welding, Cubas Welding, EHG, Skyview Steel, and 1 MTZ Welding violated the revised non-solicitation provision. Specifically, the 2 Court finds sufficient evidence in Defendant’s testimony and the testimony of 3 the Sky View Steel employee to establish triable issues of fact as to whether 4 Defendant’s communication with these customers amounted to solicitation, 5 whether these customers contacted Defendant first, and whether these 6 customers fit the revised definition of “Customer” in the non-solicitation 7 agreement. 8 As to Defendant’s communications and dealings with ARS Extreme 9 Construction and Phoinix Welding, the Court finds that Defendant failed to 10 point to evidence in the record refuting Plaintiff’s claim that Defendant 11 breached the non-solicitation provision in his dealings with these accounts. The 12 Court therefore grants summary judgment to Plaintiff on the issue of breach as 13 it pertains to these accounts only. 14 A breach of contract claim must also show “damage as a result of the 15 breach.” Saini, 434 F. Supp. 2d at 919–20 (citing Richardson v. Jones, 1 Nev. 16 405, 408 (1865)). Plaintiff has provided an expert report detailing a basis for 17 calculating damages for Defendant’s alleged breach of the non-solicitation 18 provision. (ECF No. 63-9.) According to Plaintiff’s expert, Plaintiff’s total 19 damages resulting from lost business Defendant obtained in violation of the 20 non-solicitation provisions is at least $40,221. (Id.) This figure was calculated 21 based on invoices Defendant generated on EquipmentShare’s behalf for Sky 22 View Steel, MTZ Welding, and Cubas Welding. (Id.) No damages were identified 23 for Defendant’s alleged solicitation of ARS Extreme Construction, Phoinix 24 Welding, EHG, or Queens Welding. (Id.) 25 Defendant cites to deposition testimony from a Sky View Steel employee 26 to argue that Plaintiff did nothing to maintain a business relationship with Sky 27 View Steel following Defendant’s departure from Ahern. (ECF No. 63-10 at 29, 28 57, 61.) Defendant also cites Ahern’s Rule 30(b)(6) deposition testimony to show 1 that Plaintiff failed to specifically identify any efforts it made to rent equipment 2 to Cubas Welding and MTZ Welding following Defendant’s departure from 3 Ahern. (Ahern Rule 30(b)(6) Deposition at 71-74.) 4 Viewing the evidence in the light most favorable to each non-moving party 5 and resolving all reasonable inferences in the non-moving party’s favor, the 6 Court finds there are triable issues of fact as to whether Plaintiff suffered 7 damages as a result of Defendant’s alleged breach of the non-solicitation 8 provision in his dealings with Sky View Steel, Cubas Welding, and MTZ 9 Welding. 10 The Court finds that there are no triable issues of fact as to damages for 11 Defendant’s solicitation of ARS Extreme Construction and Phoinix Welding. The 12 Court also finds no triable issues of fact as to damages for Defendant’s alleged 13 solicitation of EHG and Queens Welding. Plaintiff failed to identify any damages 14 for these breaches and alleged breaches, so the Court will grant summary 15 judgment to Defendant on the issues of damages for each of these claims. 16 After revising the non-solicitation provision to be valid and enforceable 17 and applying the revised agreement to the facts in the record, what remains are 18 triable issues of fact on Defendant’s alleged breach of the non-solicitation 19 provision as to Defendant’s dealings with Sky View Steel, Cubas Welding, and 20 MTZ Welding. 21 As to the surviving claims, because genuine issues of material fact exist 22 as to breach and damages, the Court also finds that there are genuine issues of 23 material fact precluding summary judgment on Plaintiff’s claim for breach of 24 the implied covenant of good faith and fair dealing. See Consol. Generator- 25 Nevada, Inc., 971 P.2d at 1256 (holding that when genuine issues of material 26 fact preclude summary judgment on breach, summary judgment on breach of 27 the implied covenant of good faith and fair dealing is correspondingly 28 precluded); see also Tasty One, LLC v. Earth Smarte Water, LLC, 2:20-cv-01625- 1 APG-NJK, 2022 WL 2110749, at *6 (D. Nev. June 9, 2022) (denying summary 2 judgment on breach of implied covenant of good faith and fair dealing when 3 “questions of fact remain regarding whether [Plaintiff] was damaged as a 4 result”). 5 iii. Breach of the Non-Disclosure Provision 6 “Employers commonly rely upon . . . nondisclosure . . . covenants, to 7 safeguard important business interests.” Traffic Control Servs., Inc. v. United 8 Rentals Nw., Inc., 87 P.3d 1054, 1057 (Nev. 2004) “The non-disclosure covenant 9 limits the dissemination of proprietary information by a former employee.” Id. 10 (citing Hess v. Gebhard & Co. Inc., 808 A.2d 912, 917 (Pa. 2002)). 11 Neither party contests whether Defendant breached the non-disclosure 12 provision in the Agreement. (Agreement at § 3.2.) Defendant admits that he 13 retained Ahern information in his personal email account. (ECF No. 63 at 23.) 14 This breaches Section 3.2 of the Agreement, even if Defendant is correct that 15 none of the information constitutes confidential information or trade secrets. 16 Defendant’s argument for summary judgment is that Plaintiff has failed to 17 establish damages flowing from the breach of the non-disclosure agreement. 18 Defendant argues that because Plaintiff has failed to point to any specific 19 evidence in the record showing that Defendant used Plaintiff’s information in 20 competition with Ahern, it cannot prove any damages resulting from the breach 21 of the non-disclosure provision. Defendant also cites his deposition testimony 22 denying ever using Ahern information in his employment at EquipmentShare. 23 (Young First Deposition at 75.) 24 Plaintiff argues that it has provided expert testimony linking lost revenues 25 to Defendant’s sales activities with EquipmentShare. (ECF No. 63-9.) Plaintiff’s 26 expert opined that the Ahern customer information Defendant retained in 27 violation of the Agreement held value to Defendant’s goals as a sales 28 representative for EquipmentShare and could have aided Defendant in 1 generating revenue for EquipmentShare. (Id.) 2 Viewing the evidence in the light most favorable to each non-moving party 3 and resolving all reasonable inferences in the non-moving party’s favor, the 4 Court finds triable issues of fact as to whether Plaintiff suffered damages 5 because of Defendant’s breach of the non-disclosure provision. Specifically, the 6 Court finds it reasonable to infer that Defendant may have relied on Ahern 7 information to aid him as a competitor at EquipmentShare. By the same token, 8 Defendant has pointed to his own deposition testimony refuting that inference. 9 The Court finds a triable issue of fact on whether Defendant used Ahern 10 information to aid in competition against Plaintiff, thus creating damages 11 because of the breach of the non-disclosure provision. 12 As above, because genuine issues of material fact exist as to damages, the 13 Court also finds that there are general issues of material fact precluding 14 summary judgment on Plaintiff’s claim for breach of the implied covenant of 15 good faith and fair dealing related to the breach of the non-disclosure provision. 16 Tasty One, LLC v. Earth Smarte Water, LLC, 2:20-cv-01625-APG-NJK, 2022 WL 17 2110749, at *6 (D. Nev. June 9, 2022) (denying summary judgment on breach 18 of implied covenant of good faith and fair dealing when “questions of fact 19 remain regarding whether [Plaintiff] was damaged as a result”). 20 b. Liquidated Damages 21 The last question for the Court to address related to the terms of the 22 contract involves the Agreement’s liquidated damages clause. (Agreement at § 23 5.) The clause provides that if Defendant “commits a breach or, in Company’s 24 reasonable judgment, is about to commit a breach, of any of the provisions of 25 Section 2, 3 or 4 hereof, [Plaintiff] shall be entitled to: . . . (C) liquidated 26 damages in the amount of TWO HUNDRED FIFTY THOUSAND DOLLARS AND 27 00/100THS ($250,000).” (Id.) The section goes on to say that Plaintiff “shall be 28 entitled to such money damages insofar as they can be reasonably determined.” 1 (Id.) 2 Liquidated damages provisions are presumed valid under Nevada law. 3 Haromy v. Sawyer, 654 P.2d 1022, 1023 (Nev. 1982). Liquidated damages 4 “serve as a good-faith effort to fix the amount of damages when contractual 5 damages are uncertain or immeasurable.” Khan v. Bakhsh, 306 P.3d 411, 414 6 (Nev. 2013) “[T]he party challenging the provision must establish that its 7 application amounts to a penalty.” Haromy, 654 P.2d at 1023. “In order to prove 8 a liquidated damage clause constitutes a penalty, the challenging party must 9 persuade the court that the liquidated damages are disproportionate to the 10 actual damages sustained by the injured party.” Id. 11 In this case, Plaintiff is seeking at minimum $250,000 in liquidated 12 damages, and potentially $750,000, for Defendant’s alleged breaches of the 13 Agreement. (ECF No. 63-9.) Under the terms of the Agreement, any liquidated 14 damages award is in addition to Plaintiff’s right to pursue reasonably 15 determinable money damages. Here, Plaintiff hired an expert who calculated 16 Plaintiff’s actual damages for Defendant’s alleged breach to be $40,221. (ECF 17 No. 63-9.) The Court finds that a liquidated damages award in this case would 18 be disproportionate to the actual damages sustained by Plaintiff, as calculated 19 by its own expert. Even at the low end, the liquidated damage award would be 20 more than five times Plaintiff’s actual damages. Such disproportion between a 21 liquidated damages clause and actual damages amounts to an unenforceable 22 penalty. See Khan, 306 P.3d at 414 (finding that a liquidated damages clause 23 awarding additional damages of “150% of actual damages” was an 24 unenforceable penalty for breach). The Court therefore grants Defendant 25 summary judgment on his affirmative defense related to this issue. (ECF No. 8 26 at ¶ 99.) 27 c. Conversion 28 Plaintiff’s next claim is for conversion, alleging that when Defendant 1 violated the non-disclosure provision and emailed Ahern information to his 2 personal email address, retained the information, and failed to return the 3 information, that his actions amounted to conversion of Plaintiff’s property. 4 “Conversion is a distinct act of dominion wrongfully exerted over personal 5 property in denial of, or inconsistent with, title or rights therein or in 6 derogation, exclusion or defiance of such rights.” Edwards v. Emperor's Garden 7 Rest., 130 P.3d 1280, 1287 (Nev. 2006) (citing Wantz v. Redfield, 326 P.2d 413 8 (Nev. 1958)). “Yet, conversion generally is limited to those severe, major, and 9 important interferences with the right to control personal property that justify 10 requiring the actor to pay the property's full value.” Edwards, 130 P.3d at 1287 11 (citing Restatement (Second) of Torts § 222A (1965)). 12 Nevada case law, though, “does not suggest that the measure of damages 13 is a part of the definition of conversion,” nor does it “declare the full value of the 14 property converted to be the sole measure of damages.” Bader v. Cerri, P.2d 15 314, 317 (Nev. 1980), overruled on other grounds by Evans v. Dean Witter 16 Reynolds, Inc., 5 P.3d 1043 (2000). “A conversion occurs whenever there is a 17 serious interference to a party's rights in his property.” Id. “When this happens 18 the injured party should receive full compensation for his actual losses.” Id. 19 “The party seeking damages has the burden of proving both the fact of damages 20 and the amount thereof.” Mort Wallin of Lake Tahoe, Inc. v. Com. Cabinet Co., 21 784 P.2d 954, 955 (1989). “The latter aspect of the burden need not be met with 22 mathematical exactitude, but there must be an evidentiary basis for 23 determining a reasonably accurate amount of damages.” Id. 24 Defendant argues that he is entitled to summary judgment on Plaintiff’s 25 claim for conversion because Plaintiff failed to establish an evidentiary basis for 26 damages. Plaintiff argues that it should be granted summary judgment because 27 it has established that Defendant exercised wrongful control over its property, 28 and it has established damages caused by Defendant’s misconduct. 1 Defendant does not contest Plaintiff’s assertion that Defendant 2 wrongfully retained Plaintiff’s property. Defendant improperly emailed himself 3 screenshots of customer information for every active Ahern customer in North 4 Carolina that were taken from Ahern’s password protected database. (First 5 Young Deposition at 63-67, 75-77; ECF No. 67-7.) Defendant emailed several 6 additional documents from Ahern’s database throughout the course of March 7 2021. (ECF No. 67-8; ECF No. 67-9; ECF No. 67-10; ECF No. 67-11.) The Court 8 therefore agrees with Plaintiff that Defendant converted Ahern information. The 9 Court further finds that Plaintiff provided an evidentiary basis for damages in 10 Hoffman’s expert report. (ECF No. 63-9.) The Court, in line with its findings 11 above on damages, finds that there are triable issues of fact on the issue of 12 damages here, specifically on whether there is a causal link between 13 Defendant’s conversion of Ahern information and any actual damages identified 14 by Hoffman in his report. See Bader, P.2d at 317 (“When [conversion] happens 15 the injured party should receive full compensation for his actual losses.”). 16 Summary judgment is therefore denied to both parties on Plaintiff’s claim for 17 conversion. 18 d. Nevada Trade Secrets Act 19 To establish misappropriation under the Nevada Uniform Trade Secrets 20 Act (“NUTSA”), a plaintiff must show: “(1) a valuable trade secret; (2) 21 misappropriation of the trade secret through use, disclosure, or nondisclosure 22 of use of the trade secret; and (3) the requirement that the misappropriation be 23 wrongful because it was made in breach of an express or implied contract or by 24 a party with a duty not to disclose.” Chemeon Surface Tech., LLC v. Metalast 25 Int'l, Inc., 312 F. Supp. 3d 944, 958 (D. Nev. 2018) (citing Frantz v. Johnson, 26 999 P.2d 351, 358 (Nev. 2000)). 27 The Court need not reach the second or third elements because it is 28 satisfied that there is no genuine dispute of material fact on the first element. 1 “The determination of whether corporate information, such as customer and 2 pricing information, is a trade secret is a question for the finder of fact.” Frantz, 3 999 P.2d at 358. Factors to be considered include: 4 (1) the extent to which the information is known outside of the 5 business and the ease or difficulty with which the acquired information could be properly acquired by others; (2) whether the 6 information was confidential or secret; (3) the extent and manner in which the employer guarded the secrecy of the information; and (4) 7 the former employee's knowledge of customer's buying habits and other customer data and whether this information is known by the 8 employer's competitors. 9 10 Id. at 358–59. “[N]ot every customer and pricing list will be protected as a trade 11 secret.” Id. at 359. 12 Trade secret is defined in the statute as “information, including, without 13 limitation, a formula, pattern, compilation, program, device, method, technique, 14 product, system, process, design, prototype, procedure, computer programming 15 instruction or code” that both “[d]erives independent economic value, actual or 16 potential, from not being generally known to, and not being readily 17 ascertainable by proper means by the public or any other persons who can 18 obtain commercial or economic value from its disclosure or use” and “[i]s the 19 subject of efforts that are reasonable under the circumstances to maintain its 20 secrecy.” NRS 600A.030(5). 21 The undisputed facts do not support a finding that the customer 22 information Defendant wrongfully retained amounts to a “trade secret” under 23 NUTSA. The customer list Defendant emailed himself contained only names, 24 addresses, and phone numbers, all of which can be found through public 25 sources. (ECF No. 67-7.) It does not provide any specific contacts at the 26 customer companies or any detailed information regarding customer needs, 27 preferences, or characteristics. (Id.) Pricing information also lacks the necessary 28 confidentiality to constitute a trade secret. Customers in the industry are not 1 prevented from sharing Ahern prices with competitors to obtain lower pricing. 2 (Foster Deposition at 135.) Thus, the first and second Frantz factors cut against 3 Plaintiff. While the third factor weighs in Plaintiff’s favor because Plaintiff stores 4 its information in a secure, password protected database, the fourth factor also 5 weighs against Plaintiff because Defendant’s knowledge of customer buying 6 habits can be easily acquired by competitors in the industry. Given all of these 7 factors, the Court finds that the customer lists, pricing information, and other 8 customer information are not trade secrets and therefore grants Defendant’s 9 motion for summary judgment on Plaintiff’s NUTSA claim. 10 2. Summary Judgment on Defendant’s Declaratory Judgment Claims 11 Plaintiff has moved for summary judgment on Defendant’s claims, which 12 include three claims for declaratory relief related to the validity and 13 enforceability of the non-competition and non-solicitation provisions and two 14 North Carolina state law claims. In his response brief, Defendant expressly 15 abandoned his state law claims, leaving only his claims for declaratory relief. 16 (ECF No. 77 at 2 n.1.) 17 Defendant brings his declaratory judgment claims under the North 18 Carolina Declaratory Judgment Act, N.C. Gen. Stat. § 1-253, et seq. (Id.) But 19 claims brought pursuant to North Carolina law are disallowed under the terms 20 of the Agreement, which provides that it “shall be governed by and construed in 21 accordance with the laws of the State of Nevada, without giving effect to its 22 choice of law provisions.” (Agreement § 8.1.) 23 Defendant did not plead his claim for declaratory relief pursuant to either 24 Nevada or federal law. But even if Defendant did plead his claims under the 25 federal Declaratory Judgment Act, 28 U.S.C. § 2201, his claims would still be 26 improper because “the Declaratory Judgment Act provides an affirmative 27 remedy only when a cause of action otherwise exists.” City of Reno v. Netflix, 28 Inc., 52 F.4th 874, 876 (9th Cir. 2022). Because Defendant has expressly 1 abandoned all other causes of action, his claims for declaratory judgment are 2 not tethered to any private right of action. Thus, the Court will grant Plaintiff’s 3 motion for summary judgment on Defendant’s claims. 4 3. Motions to Seal 5 Three unopposed motions to seal are pending before the Court. (ECF Nos. 6 66, 69, 76.) Good cause appearing, the Court grants each of these motions to 7 seal. 8 4. Motions to Supplement 9 Two opposed motions from Defendant for leave to file supplements to his 10 summary judgment briefing are pending before the Court. (ECF Nos. 87, 88.) 11 Local Rule 7-2(g) provides that, “[a] party may not file supplemental pleadings, 12 briefs, authorities, or evidence without leave of court granted for good cause.” 13 “Good cause may exist either when the proffered supplemental authority 14 controls the outcome of the litigation, or when the proffered supplemental 15 authority is precedential, or particularly persuasive or helpful.” Urb. Outfitters, 16 Inc. v. Dermody Operating Co., LLC, 572 F. Supp. 3d 977, 984 (D. Nev. 2021) 17 (quoting Alps Prop. & Casualty Ins. C. v. Kalicki Collier, LLP, 526 F. Supp. 3d 18 805, 812 (D. Nev. 2021)). If the arguments or authority which the moving party 19 seeks to introduce are not binding or persuasive, the mere existence of those 20 arguments or authority is not sufficient to establish good cause for the 21 purposes of granting a request for leave to file a supplement pleading. Greer v. 22 Freemantle Productions, 622 F. Supp. 3d 1010, 1015 (D. Nev. 2022). 23 Here, the proffered supplemental authority from the Arizona Court of 24 Appeals is not precedential or binding. While it deals with similar facts as this 25 case, the Court finds that it is not sufficiently persuasive or helpful to establish 26 good cause for the purposes of granting Defendant’s motions to supplement. 27 The motions are therefore denied. 28 1 IV. Conclusion 2 IT IS THEREFORE ORDERED that Defendant’s motion for summary 3 || judgment (ECF No. 63) is GRANTED in part and DENIED in part consistent 4 || with this Order. 5 IT IS FURTHER ORDERED that Plaintiffs motion for summary judgment 6 || (ECF No. 65) is GRANTED in part and DENIED in part consistent with this 7 || Order. 8 IT IS FURTHER ORDERED that Plaintiffs motion for summary judgment 9 || (ECF No. 68) is GRANTED. 10 IT IS FURTHER ORDERED that the motions to seal in this case (ECF 11 || Nos. 66, 69, 76) are each GRANTED. 12 IT IS FURTHER ORDERED that Defendant’s motions to supplement (ECF 13 || Nos. 87, 88) are each DENIED. 14 15 DATED THIS 5t# day of March 2023. 16 Aras jlosect en 17 ANNER TRAUM 18 UNITED STATES DISTRICT JUDGE 19 20 21 22 23 24 25 26 27 28