GXO Logistics, Inc. v. Cunningham

CourtDistrict Court, W.D. North Carolina
DecidedMay 15, 2023
Docket3:23-cv-00199
StatusUnknown

This text of GXO Logistics, Inc. v. Cunningham (GXO Logistics, Inc. v. Cunningham) is published on Counsel Stack Legal Research, covering District Court, W.D. North Carolina primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
GXO Logistics, Inc. v. Cunningham, (W.D.N.C. 2023).

Opinion

UNITED STATES DISTRICT COURT WESTERN DISTRICT OF NORTH CAROLINA CHARLOTTE DIVISION 3:23-cv-000199-RJC-DCK

GXO LOGISTICS, INC., ) ) Plaintiff, ) ) v. ) ) MARVIN W. CUNNINGHAM. ) ORDER ) Defendant. ) ) )

THIS MATTER is before the Court on Plaintiff GXO Logistics, Inc.’s Motion for a Temporary Restraining Order and Preliminary Injunction (the “Motion”). (Doc. No. 18). For the reasons stated herein, the Motion is DENIED. I. OVERVIEW GXO Logistics, Inc. (“GXO”) filed this breach of contract action seeking to enforce a non- compete provision with a former c-suite executive, Marvin Cunningham (“Cunningham”). In doing so, GXO seeks to prevent Cunningham from working for his new employer, Prologis, Inc. (“Prologis”), until the non-compete provision expires. GXO argues that Prologis’ recent expansion into “Workforce Solutions” positions Prologis as a competitor for whom Cunningham is forbidden to work and that Cunningham breached his non-compete agreement by accepting a position at Prologis as the head of its Workforce Solutions program. While GXO correctly notes that Prologis is a competitor, and while Cunningham’s breach of his employment agreement seems imminent, GXO’s own evidence shows that Cunningham has yet to breach that agreement. Thus, GXO fails to demonstrate a likelihood of success on the merits of its claim, and the Court cannot grant the extraordinary relief that GXO requests. II. BACKGROUND GXO is a global “leader in supply chain solutions, including the design, management, and optimization of warehouse logistics operations.” (Doc. No. 19, at 3). GXO describes its business as “third-party supply chain logistics,” meaning GXO adds value by configuring and optimizing its customers’ warehouses for maximum efficiency. (Id. at 10). To achieve that efficiency, GXO

offers a range of technology and automation tools – most importantly (to GXO and to this action), GXO provides labor management optimization. (Id. at 4). One labor management optimization tool GXO is offers is Smart, a “proprietary software program that incorporates data from GXO’s human resource database, timekeeping software, and warehouse management system to project shipment volumes and labor needs at each of GXO’s warehouses.” (Id. at 7). As one of the four highest-ranking employees in the GXO AMAPAC (Americas and Asia Pacific) region, Cunningham helped develop and refine Smart and led “GXO’s labor management optimization initiatives, operations and automation and technology tools in the AMAPAC region,” gaining knowledge of confidential information, analytics, tools, and initiatives

that GXO used throughout its business in the process. (Id. at 7-9). When he was promoted to Chief Operating Officer for AMAPAC, Cunningham entered into an employment agreement (the “Agreement”). (Id. at 9-10). That agreement included fairly standard non-compete, confidentiality, and nonsolicitation provisions, including instructions not to compete with GXO anywhere within the United States for 18 months after Cunningham’s departure from GXO and a promise from Cunningham not to disclose or use any of GXO’s confidential information. (Doc. No. 1-1, Agreement, at ¶¶ 1, 7) Within the non-compete provisions, GXO defined “Competing Business” to include “providers of contract logistics services” and a business that “competes with the segment of [GXO’s] business with which you were employed.” (Doc. No. 1-1, Agreement, at ¶ 18). This agreement gained significance when Cunningham resigned from GXO on March 14, 2023 and accepted a position at Prologis. (Doc. No. 19, at 10). Prologis describes itself as a warehouse owner first and foremost, noting it “acquires, develops, and maintains the largest

collection of high-quality logistics real estate in the world.” (Doc. No. 23, at 1). Thus, in some situations, GXO and Prologis might work together to serve the same client – one might use a Prologis warehouse for their business and employ GXO as a third-party logistics provider inside that warehouse. Recently, however, Prologis has expanded beyond real estate. In its 2023 Annual Report, Prologis explained that “[t]he nature of the services we are providing to our customers is expanding” and that it now “provide[s] a platform of solutions to address challenges that companies face in global fulfillment today … focus[ing] on innovative ways to meet our customers’ operations, energy and sustainability, mobility and workforce needs.” Prologis, Inc., Annual report pursuant to Section 13 and 15(d) 4 (Feb. 14, 2023).1

1 See also Prologis, LinkedIn, https://www.linkedin.com/company/prologis/ (last visited May 12, 2023) (“Beyond real estate, our Essentials platform optimizes the company’s global asset portfolio to provide our customers solutions that address today’s warehouse and shipping challenges.”); Workforce Essentials, Prologis, https://www.prologis.com/what-we-do/prologis- essentials/workforce-essentials (last visited May 12, 2023) (“[W]e provide the latest technology solutions to increase the productivity and safety of your workers”); Id. (“[W]e offer the latest in adaptable, scalable robotics solutions to power your digital warehouse and increase the productivity of your workers”); Id. (“[Through Prologis] you can optimize the entire picking process in your logistics facility and use operational reporting and management tools for realtime workflow optimization for associates and robots”); Id. (“Through Prologis partner WorkStep, we can help you acquire and retain the best logistics talent for your hourly workforce needs. Once hired, we’ll provide real-time feedback, insights, and suggested actions to keep your workers highly engaged and empower managers to take the right actions to improve frontline retention and drive organizational improvements at your facility.”). This expansion, GXO notes, coincides with Cunningham’s move to Prologis. According to Prologis’ description of Cunningham’s position, the Global Head of Workforce Solutions will be “focused on building a workforce solutions business from the ground up by leveraging the scale and reach of the Prologis platform.” (Doc. No. 1-1, Job Description). With these new offerings, GXO alleges, Prologis competes with GXO, and Cunningham is spearheading that effort in his

new position at Prologis, in violation of his non-compete and confidentiality agreements. Cunningham disputes that narrative. First, Cunningham claims that Prologis is “GXO’s landlord, not its competitor.” (Doc. No. 23, at 1). Cunningham also asserts that, in standard industry practice, Prologis and GXO do not offer the same services to the same customers. (Id. at 2). Companies make an initial decision to either outsource logistics to a third-party logistics provider like GXO or to handle logistics in-house. If the company chooses third-party logistics, then Prologis might sell certain equipment to GXO, who will in turn use that equipment in its own business. If the company chooses in-house logistics, then the company still could buy equipment from Prologis, but, according to Cunningham, GXO does not sell one-off equipment apart from its

full logistics business. Thus, Cunningham claims, the companies never compete for the same business from the same customer. (Id.). GXO disagrees with Cunningham’s framing. According to GXO, while Prologis does not offer “full service logistics,” Prologis does offer tools to optimize warehouse workforce management and operations. (Doc. No. 24, at 5). Thus, the customer who chose to handle logistics in-house and may have been interested in switching to GXO is now less likely to do so because Prologis offers some of the same services to that customer. In addition, as Prologis notes, Prologis might sell certain equipment to GXO, but Prologis also might sell that equipment to GXO’s competitors, giving those competitors an edge against GXO. (Id.). In both of these situations, GXO argues, Prologis competes with GXO.

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GXO Logistics, Inc. v. Cunningham, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gxo-logistics-inc-v-cunningham-ncwd-2023.