DTC Energy Group, Inc. v. Hirschfeld

CourtDistrict Court, D. Colorado
DecidedMarch 23, 2020
Docket1:17-cv-01718
StatusUnknown

This text of DTC Energy Group, Inc. v. Hirschfeld (DTC Energy Group, Inc. v. Hirschfeld) is published on Counsel Stack Legal Research, covering District Court, D. Colorado primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
DTC Energy Group, Inc. v. Hirschfeld, (D. Colo. 2020).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Chief Judge Philip A. Brimmer Civil Action No. 17-cv-01718-PAB-KLM DTC ENERGY GROUP, INC., a Colorado Corporation, Plaintiff, v. ADAM HIRSCHFELD, JOSEPH GALBAN, CRAIG HIRSCHFELD, JOSEPH JOHNSON, KATIE STROMSTAD, ROSS RHINEHART, and ALLY ENERGY SERVICES, INC., a Wyoming corporation, Defendants. ORDER This matter is before the Court on defendant Adam Hirschfeld’s Motion for Judgment on the Pleadings [Docket No. 134]. The Court has jurisdiction pursuant to 28 U.S.C. §§ 1331 and 1367. I. BACKGROUND A. Factual Background Plaintiff DTC Energy Group, Inc. (“DTC”) is a consulting and staffing firm serving the oil and gas industry. Docket No. 82 at 4, ¶ 8.1 DTC’s business involves placing

1 These facts are drawn from Plaintiff’s Second Amended Verified Complaint and Jury Demand [Docket No. 82]. The Court discusses only those allegations relevant to resolution of the instant motions. Further background can be found in the Court’s orders on DTC’s motion for a preliminary injunction and on various defendants’ motions employees with companies in the oil and gas industry. Id. at 7, ¶ 20. In connection with that business, DTC has confidential information, some of which it contends are “trade secrets.” Id. at 12-14, ¶¶ 42-50. In May 2013, DTC hired defendant Adam Hirschfeld (“Hirschfeld”) as a

salesman. Id. at 8, ¶ 27. In January 2014, DTC promoted Hirschfeld to be its business development lead. Id. at 9, ¶ 29. As business development lead, Hirschfeld had access to DTC’s confidential information. Id. ¶ 33. DTC and Hirschfeld executed an employment agreement effective January 1, 2015. Id. ¶ 30; see also Docket No. 82-2 (copy of employment agreement). Paragraph 16 of that agreement provides, in relevant part: Except for an action exclusively seeking injunctive relief, any disagreement, claim or controversy arising under or in connection with this Agreement, Employee’s employment or termination of employment with the Company shall be resolved by way of confidential binding arbitration, pursuant to the Uniform Arbitration Act, C.R.S. § 13-22-201 et. seq., to be conducted in the City and County of Denver, State of Colorado, all costs of enforcement, collection, including reasonable attorney’s fees, to be awarded to the party or parties substantially prevailing therein. Docket No. 82-2 at 7, ¶ 16. The employment agreement also includes a nonsolicitation provision. Id. at 6, ¶ 12. The nonsolicitation provision does not apply, however, if the employment agreement is terminated by Hirschfeld “because there has been a change in the current equity ownership of [DTC].” Id. In July 2014, DTC hired defendant Katie Stromstad (“Stromstad”) as a human to dismiss. See Docket Nos. 57 and 160. The allegations in the complaint are to be taken as true in considering a motion for judgment on the pleadings. Adams v. Jones, 577 F. App’x 778, 781-82 (10th Cir. 2014) (unpublished). 2 resources specialist. Docket No. 82 at 5, ¶ 13. In November 2014, DTC hired defendant Joseph Galban (“Galban”) as a staff accountant. Id. at 4, ¶ 10. From approximately July 2015 to June 2016, DTC subleased office space to defendant Ross Rhinehart (“Rhinehart”). Id. at 5, ¶ 14.

In the summer of 2015, DTC began discussing a potential business relationship with defendant Ally Consulting, LLC (“Ally Consulting”). Id. at 15, ¶ 57.2 Ally Consulting provides similar staffing services in the oil and gas industry. Id. at 16, ¶ 59. DTC agreed that it would assist Ally Consulting by “taking on its few employees and/or contractors and by handling the associated administrative services . . . in exchange for percentage-based payments from [Ally Consulting].” Id. at 15, ¶ 58. DTC and Ally Consulting executed an agreement on January 11, 2016; Ally Consulting terminated the

agreement on July 11, 2016. Id. at 16, ¶¶ 60-62. DTC alleges that, beginning in November 2015, Hirschfeld, defendant Craig Hirschfeld, and defendant Joseph Johnson (“Johnson”) began “plotting” to build up Ally Consulting by “stealing DTC’s business.” Id. at 16, ¶ 64. DTC alleges that Hirschfeld, Craig Hirschfeld, and Johnson agreed that Hirschfeld would work for Ally Consulting while still employed by DTC, and that Hirschfeld would convince Galban and Stromstad to assist him. Id. at 17, ¶ 66-67. DTC alleges that Hirschfeld would secure customers on Ally Consulting’s behalf from customers who believed they were dealing with DTC,

and that Hirschfeld, Galban, Stromstad, and Rhinehart would email the customers “onboarding paperwork on Ally letterhead that they had copied from DTC forms.” Id. at 2 At the time, Ally Consulting was known as Wyodak Staffing, LLC. 3 18, ¶¶ 73-74. Hirschfeld, Galban, Stromstad, and Rhinehart worked to conceal the work they were doing for Ally Consulting from DTC’s owners. Id. at 20-21, ¶¶ 90-97. In April 2017, there was a change in the equity ownership of DTC. Id. at 32, ¶ 180. On May 3, 2017, Hirschfeld resigned from DTC, effective May 31. Id., ¶ 187. In

late May 2017, Hirschfeld asked Rhinehart to obtain “confidential DTC financial information” from Galban. Id. at 34, ¶ 195. Hirschfeld, Stromstad, and Galban now all work for Ally Consulting. Id. at 35, ¶ 203. Before leaving DTC, Hirschfeld stole his work laptop and flash drives that had “thousands of confidential DTC files he downloaded to them.” Id. at 37, ¶ 220. B. Procedural History DTC initiated this lawsuit on July 14, 2017. Docket No. 1. On the same day,

DTC moved for a temporary restraining order and preliminary injunction based on the alleged misappropriation of its trade secrets by Hirschfeld, Galban, and Ally Consulting. Docket No. 4. After a hearing on the motion on July 20, 2017, the Court denied DTC’s request for a temporary restraining order, finding that DTC had failed to demonstrate a likelihood of success on the merits of its misappropriation claims. See Docket No. 17 at 69. On September 13, 2017, DTC filed an amended complaint and an amended

motion for a preliminary injunction. Docket Nos. 24, 25. The amended motion sought relief against Adam Hirschfeld, Galban, and Ally Consulting for misappropriation of trade secrets under federal and state law, breach of contract, and breach of the duty of loyalty and unfair competition. Docket No. 25 at 2, 6-16. In response, on September 4 26, 2017, Hirschfeld filed a motion to compel arbitration, arguing that Paragraph 16 of the employment agreement required that DTC’s claims be resolved through arbitration. Docket No. 26. On January 4, 2018, the Court denied the motion. Docket No. 37. The Court concluded that, because DTC’s claims against Hirschfeld “exclusively [sought]

injunctive relief,” DTC’s claims fell within the exception in the employment agreement for actions “exclusively seeking injunctive relief.” Id. at 5-6. After an evidentiary hearing on January 30, 2018, the Court denied DTC’s request for a preliminary injunction on March 2, 2018. Docket No. 57. The Court found that DTC “presented no evidence . . . that defendants have retained access to [DTC’s] proprietary information,” that defendants have “continued to appropriate DTC’s name or resources to solicit business,” or that there is “ongoing confusion within the industry as

to the relationship between the two companies.” Id. at 16, 19. As a result, the Court concluded that DTC had failed to demonstrate a likelihood of irreparable harm on all of its claims save for the breach of contract claim. Id. at 16.

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Bluebook (online)
DTC Energy Group, Inc. v. Hirschfeld, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dtc-energy-group-inc-v-hirschfeld-cod-2020.