Sandhills Home Care, L.L.C. v. Companion Home Care - Unimed, Inc.

2016 NCBC 59

• Court: North Carolina Business Court
• Decided: August 1, 2016
• Docket: 15-CVS-3329
• Status: Published

Opinion

Sandhills Home Care, L.L.C. v. Companion Home Care – Unimed, Inc., 2016 NCBC 59.

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION COUNTY OF ROBESON FILE NO. 15 CVS 3329

SANDHILLS HOME CARE, L.L.C., ) ) Plaintiff, ) vs. ) ) COMPANION HOME CARE - ) UNIMED, INC., CHARLES VINSON ) GRAHAM, MARY JACOBS, ) ANDRIANNA EMANUEL, CASEY ) OPINION AND ORDER LOCKLEAR, SHANITA HARRIS, ) CONDOLA CARBOUGH, MOESHA ) HOLT, KORTNEY JACOBS, ) JENNIFER KNIGHT, NATALIE ) LOCKLEAR, SUMMER ) MCLAUGHLIN and JOANNA ) MISHUE. ) ) Defendants. )

THIS CAUSE was designated a mandatory complex business case by Order of the

Chief Justice of the North Carolina Supreme Court, pursuant to N.C. Gen. Stat. §7A-45.4(b)

(hereinafter, references to the North Carolina General Statutes will be to "G.S."), and

assigned to the undersigned Special Superior Court Judge for Complex Business Cases.

THIS MATTER is before the Court upon (i) Defendants Companion Home Care –

Unimed, Inc. and Charles Vinson Graham's Motion to Dismiss Plaintiff's Amended Verified

Complaint, (ii) Mary Jacobs' Motion to Dismiss Plaintiff's Amended Verified Complaint, (iii)

Kortney Jacobs' Motion to Dismiss Plaintiff's Amended Verified Complaint, and (iv) Shanita

Harris' (collectively, with Companion Home Care and Graham, the "Moving Defendants")

Motion to Dismiss Plaintiff's Amended Verified Complaint (collectively, the "Motions to

Dismiss"). The Moving Defendants filed the Motions pursuant to Rule 12(b)(6) of the North

Carolina Rules of Civil Procedure ("Rule(s)"). THE COURT, having considered the Motions, briefs in support of and in opposition to

the Motions, appropriate matters of record, and the arguments of counsel at the hearing on

the Motions, concludes as stated herein.

Van Camp, Meacham & Newman, PLLC, by Thomas M. Van Camp, for Plaintiff Sandhills Home Care, LLC. Teague Campbell Dennis & Gorham, LLP, by Jennifer B. Milak, Leslie P. Lasher, and Justin G. May, for Defendants Companion Home Care – Unimed, Inc. and Charles Vinson Graham. Locklear, Jacobs, Hunt & Brooks, by Grady L. Hunt, for Defendants Mary Jacobs, Shanita Harris, and Kortney Jacobs. McGuire, Judge. FACTUAL AND PROCEDURAL BACKGROUND

1. Plaintiff Sandhills Home Care, LLC ("Plaintiff") is headquartered in

Pembroke, North Carolina, and provides home health care to customers in and around

Robeson County, North Carolina.1 Plaintiff provides home care to its customers within a

radius of 100 miles from Pembroke, North Carolina.2

2. Defendant Companion Home Care-Unimed, Inc. ("Companion") is

headquartered in Lumberton, North Carolina and is a "direct competitor of the Plaintiff,"3

providing the same home health care services as Plaintiff to customers in the same

geographic area. Defendant Charles Vinson Graham ("Graham") is the President and owner

of Companion.4

3. Plaintiff employs qualified individuals to provide its home health care services

and its employees have "constant and direct contact with Plaintiff's customers at the

customer's home or residence" and typically provide such care on a "one-on-one basis."5 The

1 Am. Compl. ¶ 1. 2 Id. at ¶ 20. 3 Id. at ¶¶ 2, 21. 4 Id. at ¶ 3. 5 Am. Compl. ¶ 18 employees "develop over time a strong bond, both professionally and personally" with

Plaintiff's customers.6 Plaintiff alleges that because of this strong bond, it requires its

employees to enter into employment agreements that contain restrictive covenants

prohibiting the employees from competing with Plaintiff, from soliciting Plaintiff's customers

following termination of employment, and from inducing Plaintiff's employees to terminate

employment with Plaintiff.7 Plaintiff required employees to sign one of two different

employment agreements as a condition of employment: the At-Will Employment Agreement

("At-Will Agreement")8 or the Non-Compete Agreement ("Non-Compete Agreement").9 The

restrictive covenants in the At-Will Agreement provide as follows:

COVENANT NOT TO COMPETE.

(b) Employee hereby covenants and agrees that, for a period of one (1) year following the termination of his/her employment relationship with Employer, for whatever reason, whether voluntary or involuntary, and for cause or no cause, he/she shall not directly or indirectly, on behalf of himself or any other person, company, or entity:

(i) work for, provide services for, consult with, or otherwise assist any individual or entity who is in the home health or personal care business competing with the Employer. This covenant not to compete shall be limited to any county in North Carolina where Employer is providing services at the time of Employee's separation;

(ii) solicit the sale of, sell, or otherwise provide any services that are similar to or competitive with services offered by Employer, to any person, company or entity which was a client or a potential client of Employer for such services and with whom Employee had direct contact with during the two (2) years prior to Employee's separation;

(iii) solicit, attempt to persuade or communicate with any client of Employer or any potential client of Employer with whom Employee had direct contact with during the two (2) years prior to Employee's separation of employment with Employer, to discontinue, limit or otherwise interfere with business relationship between Employer and said client(s).

6 Id. 7 Id. at ¶ 19. 8 Am. Compl. Exhs. A-C. 9 Id., Exhs. D-K. NON-INDUCEMENT. Employee understands that any attempt on the part of Employee to induce others to leave Employer's employ, or any effort by Employee to interfere with Employer's relationship with other employees would be harmful and damaging to Employer. Therefore, Employee expressly agrees that during the term of employment, and for a period of one (1) year thereafter, he/she will not in any way, directly or indirectly, (1) induce or attempt to induce any employee to quit employment with Employer; (2) interfere or disrupt Employer's relations with other employees; (3) solicit or entice any person employed with Employer. In the event that Employee does employ an employee of Employer in violation of this Agreement, Employer shall have the right to seek and obtain a Temporary Restraining Order, ex parte, and other injunctive or equitable relief as is necessary to protect its interests.

4. The restrictive covenants in the Non-Compete Agreement provide as

follows:

NON-COMPETE COVENANT. Worker will not compete with Sandhills Home Care for a period of one (1) year after Worker's separation from Sandhills Home Care within the geographical area that defined by a 100 mile radius of Sandhills Home Care, LLC, 401 E. Third Street, Ste. 3C, Pembroke, N.C, 28372.

Further, Worker agrees for a period of one (1) year from the date of Worker's separation from Sandhills Home Care not to perform any work or services for any customer or account for which Sandhills Home Care or its agents, including Worker, performed work or services during the six months preceding the date of Worker's separation.

NON-SOLICITATION COVENANT. For a period of one (1) year from and after termination of Worker's separation from Sandhills Home Care, Worker will not solicit or attempt to procure the customers, accounts, or business that are a part of the book of business of Sandhills Home Care at the date of Worker's separation from Sandhills Home Care. Worker further agrees for a period of one (1) year from and after Worker's separation not to solicit any prospective customer whom Worker or Sandhills Home Care (or its agents) has solicited within the six months immediately preceding separation.

Further, for a period of one (1) year after Worker's separation from Sandhills Home Care, Worker will not directly or indirectly solicit, induce, or attempt to induce any Worker of Sandhills Home Care to terminate his or her employment with Sandhills Home Care. 5. Defendants Mary Jacobs, Casey Locklear, and Andrianna Emmanuel are

former employees of Plaintiff. Mary Jacobs, Casey Locklear, and Andrianna Emmanuel

executed the At-Will Agreement at the time they were hired by Plaintiff.10

6. Defendants Shanita Harris, Condola Carbough, Moesha Holt, Kortney Jacobs,

Jennifer Knight, Natalie Locklear, Summer McLaughlin and Joanna Mishue are former

employees of Plaintiff, who executed the Non-Compete Agreement at the time they were hired

(collectively, the individual Defendants other than Companion Defendants, in any

combination, are referred to as the "Former Employee Defendants").11

7. Plaintiff employed Mary Jacobs as an office manager, and Shanita Harris as a

manager in training.12 Mary Jacobs and Shanita Harris had access to Plaintiff's confidential

information regarding Plaintiff's customers and employees including "which [ ] employee was

servicing each of the Plaintiff's customers" and the services Plaintiff was providing to its

customers.13

8. Plaintiff employed Kourtney Jacobs, Casey Locklear, Shanita Harris, Condola

Carbough, Moesha Holt, Jennifer Knight, Natalie Locklear, Summer McLaughlin, Joanna

Mishue, and Adrianna Emmanuel as Certified Nursing Assistants or Patient Care Aides.

Each of these individuals provided home health care services to Plaintiff's customers.14

9. Plaintiff alleges that in or around October 2015, Mary Jacobs and Shanita

Harris conspired with Companion and Graham to solicit Plaintiff's employees to leave

employment with Plaintiff and become employed with Companion.15 Plaintiff alleges that

Former Employee Defendants terminated employment with Plaintiff, became employed by

10 Am. Compl. ¶¶ 22-24. 11 Id. at ¶¶ 25-27, 29-32. 12 Id. at ¶¶ 22, 25. 13 Id. 14 Id. at ¶¶ 23-32. 15 Am. Compl. ¶¶ 33-39. Companion, and convinced the customers they serviced to switch providers from Plaintiff to

Companion in a "plan or scheme to destroy the Plaintiff's business."16 Plaintiff alleges that

the employees were successful in soliciting their customers because each "had a close

personal and professional relationship with Plaintiff's customers."17 Plaintiff further alleges

that "Defendants Graham and Companion were aware of the existence and terms of the

individual Defendants' employment contracts with the Plaintiff and consciously and

knowingly encouraged the individual Defendants to breach their contracts."18

10. Plaintiff subsequently sent letters to Graham seeking to determine whether

the Former Employee Defendants had gone to work for Companion, but received no

response.19 Plaintiff also sent letters to the Former Employee Defendants asking them if

they had gone to work for Companion "in violation of their employment agreements

Defendants did not respond to Plaintiff's letters.20 Former Employee Defendants did not

respond to the letters.

11. On December 31, 2015, Plaintiff filed a Verified Complaint and Prayer for

Injunctive Relief, and on February 24, 2016 Plaintiff filed an Amended Verified Complaint

and Prayer for Injunctive Relief (the "Amended Complaint").21 The Amended Complaint

made claims for breach of contract, tortious interference with contract, unfair and deceptive

trade practices, misappropriation of trade secrets, breach of fiduciary duty, and conspiracy

against the various Defendants, and sought a preliminary injunction against the Defendants.

Counsel subsequently made appearances on behalf of Companion and Graham, and on behalf

16 Id. at ¶¶ 38-40. 17 Id. at ¶ 35. 18 Id. at ¶ 41. 19 Id. at ¶¶ 45-47, Exhs. L-M. 20 Id. at ¶¶ 48-49, Exh. N. 21 Plaintiff properly served all of the Defendants except Andrianna Emanuel with the Summons and

the Complaint and the Amended Complaint. Accordingly, Emanuel is not a party to this lawsuit. of Mary Jacobs, Shanita Harris and Kourtney Jacobs. Casey Locklear, Condola Carbough,

Moesha Holt, Jennifer Knight, Natalie Locklear, Summer McLaughlin and Joanna Mishue

have not appeared in the case.

12. On March 21, 2016, the Court held a properly noticed hearing on Plaintiff's

Motion for Preliminary Injunction. Casey Locklear, Condola Carbough, Moesha Holt,

Jennifer Knight, Natalie Locklear, Summer McLaughlin and Joanna Mishue did not appear

at the hearing. On March 23, 2016, the Court entered a Consent Preliminary Injunction

against the Moving Defendants prohibiting them from soliciting Plaintiff's customers and

from inducing Plaintiff's employees to terminate employment. On March 29, 2016, the Court

entered a Preliminary Injunction against Casey Locklear, Condola Carbough, Moesha Holt,

Jennifer Knight, Natalie Locklear, Summer McLaughlin and Joanna Mishue.

13. On March 11, 2016, Companion and Graham filed their Motion to Dismiss and

Answer, and on March 28, 2016, Mary Jacobs, Shanita Harris and Kourtney Jacobs filed

their Motions to Dismiss and Answers. The Motions have been fully briefed and are now ripe

for determination.

DISCUSSION

14. Moving Defendants seek to dismiss the Amended Complaint pursuant to Rule

12(b)(6) for failure to state a claim upon which relief can be granted. When ruling on a

12(b)(6) motion to dismiss, the Court must determine "whether the complaint, when liberally

construed, states a claim upon which relief can be granted on any theory." Benton v. W. H.

Weaver Constr. Co., 28 N.C. App. 91, 95, 220 S.E.2d 417, 420 (1975). Such a motion should

be granted only when the complaint, on its face, reveals (a) that no law supports the plaintiff's

claim, (b) the absence of facts sufficient to form a viable claim, or (c) some fact which

necessarily defeats the plaintiff's claim. Jackson v. Bumgardner, 318 N.C. 172, 175, 347

S.E.2d 743, 745 (1986). The Court treats the well-pleaded allegations in a complaint as true and admitted in analyzing a 12(b)(6) motion to dismiss. Sutton v. Duke, 277 N.C. 94, 98, 176

S.E.2d 161, 163 (1970). While facts and permissible inferences set forth in the complaint are

analyzed in a light most favorable to the plaintiff, un-warranted conclusions of law or

deductions of fact will not be deemed admitted. Ford v. Peaches Entm't Corp., 83 N.C. App.

155, 156, 349 S.E.2d 82, 83 (1986). The court may not consider material that not is

mentioned, contained, or attached in or to the Complaint, or else this rule 12(b)(6) motion

will be converted into a Rule 56 motion for summary judgment. Better Bus. Forms & Prods.

v. Craver, 2007 NCBC LEXIS 34, *8 (N.C. Super. Ct. 2007).

15. Plaintiff makes six separate claims for breach of contract against the Former

Employee Defendants based upon the distinct obligations in the agreements regarding (a)

restrictions on future employment and competition (the "Non-competition Restrictions"), (b)

restrictions on solicitation of Plaintiff's clients (the "Non-solicitation Restrictions"), and (c)

restrictions on the inducement of Plaintiff's employees to leave employment with Plaintiff

(the "Non-inducement Restrictions"). Moving Defendants seek dismissal of all of the claims

for breach of contract. The Court will address the Non-competition Restrictions, the Non-

solicitation Restrictions, and the Non-inducement Restrictions in turn.

A. The Non-competition Restrictions.

16. Plaintiff alleges Mary Jacobs, Casey Locklear, and Andrianna Emmanuel each

breached the Non-competition Restrictions of the At-Will Agreement (Count I), and that

Shanita Harris, Condola Carbough, Moesha Holt, Kortney Jacobs, Jennifer Knight, Natalie

Locklear, Summer McLaughlin and Joanna Mishue each breached the Non-competition

Restrictions of the Non-Compete Agreement (Count II). Moving Defendants argue that the

unreasonably broad scope of the time, territory, and future employment restrictions render the underlying employment contracts unenforceable.22 Plaintiff contends that the restrictive

covenants are reasonable and enforceable.

17. North Carolina courts will enforce a covenant not to compete if it is: "(1) in

writing; (2) reasonable as to [the] terms, time, and territory; (3) made a part of the

employment contract; (4) based on valuable consideration; and (5) not against public policy."

Triangle Leasing Co. v. McMahon, 327 N.C. 224, 228, 393 S.E.2d 854, 857 (1990); United

Lab., Inc. v. Kuykendall, 322 N.C. 643, 649-50, 370 S.E.2d 375, 380 (1988). The

reasonableness of a non-competition covenant is a matter of law for the court to decide.

Medical Staffing Network, Inc. v. Ridgway, 194 N.C. App. 649, 655, 670 S.E.2d 321, 327

(2009). The party seeking enforcement of a restrictive covenant has the burden of proving

its reasonableness. Id.

18. Since time and territory each affect the reasonableness of a restrictive

covenant, the Court must review them in tandem. Farr Associates, Inc. v. Baskin, 138 N.C.

App. 276, 280, 530 S.E.2d 878, 881 (2000) ("A longer period of time is acceptable where the

geographic restriction is relatively small, and vice versa."). In the absence of an express

geographic territory restriction, a court can enforce a restriction prohibiting a former

employee from soliciting customers or clients. Whittaker Gen. Med. Corp., 324 N.C. at 528-

29, 379 S.E.2d at 828 (relying on Kuykendall and enforcing a noncompetition agreement that

included client-based restrictions for 24 months without any expressly defined geographical

territory other than the employee's sales territory at the time of termination); Triangle

Leasing Co., 327 N.C. at 229, 393 S.E.2d at 857-58 (enforcing noncompetition agreement

restricting an employee for 24 months from soliciting employer clients in areas in which the

employer operates without any expressly defined geographical territory). No matter how the

22 Companion Br. Supp. of Mot. to Dis. p. 5. territorial restriction is delineated, it can be no greater than is reasonably necessary to

protect the legitimate business interests of the employer. Manpower of Guilford County, Inc.

v. Hedgecock, 42 N.C. App. 515, 521, 257 S.E.2d 109, 114 (1979).

19. The "protection of customer relationships and goodwill against

misappropriation by departing employees is well recognized as a legitimate protectable

interest of the employer," Kuykendall, 322 N.C. at 651, 370 S.E.2d at 381, particularly where

the nature of the employment brings "the employee in personal contact with patrons or

customers of the employer, or enable[s] [the employee] to acquire valuable information as to

the nature and character of the business and the names and requirements of the patrons or

customers." A.E.P. Indus., Inc. v. McClure, 308 N.C. 393, 408, 302 S.E.2d 754, 763 (1983);

Harwell Enters., Inc. v. Heim, 276 N.C. 475, 480, 173 S.E.2d 316, 320 (1970); Med. Staffing

Network, Inc., 194 N.C. App. at 656, 670 S.E.2d at 327.

i. The At-Will Agreement.

20. The Non-competition Restriction in the At-Will Agreement provides as follows:

(b) Employee hereby covenants and agrees that, for a period of one (1) year following the termination of his/her employment relationship with Employer, for whatever reason, whether voluntary or involuntary, and for cause or no cause, he/she shall not directly or indirectly, on behalf of himself or any other person, company, or entity:

(i) work for, provide services for, consult with, or otherwise assist any individual or entity who is in the home health or personal care business competing with the Employer. This covenant not to compete shall be limited to any county in North Carolina where Employer is providing services at the time of Employee's separation.

21. Moving Defendants argue that prohibiting the employees subject to the At-

Will Agreement from "work[ing] for, provid[ing] services for, consult[ing] with, or

otherwise assist[ing]" is overly broad because it effectively prohibits the Former Employee

Defendants from obtaining employment with any other company in the home health

business in any North Carolina county in which the Plaintiff provides services. Covenants that restrict an employee from working for in any capacity or providing

services of any type to competitors, and are not restricted to prohibiting the employee

from performing the same type of work or services, are unreasonable. Medical Staffing

Network, Inc., 194 N.C. App. at 656, 670 S.E.2d at 327 ("[R]estrictive covenants are

unenforceable where they prohibit the employee from engaging in future work that is

distinct from the duties actually performed by the employee."); VisionAIR, Inc. v. James,

167 N.C. App. 504, 508-509, 606 S.E.2d 359, 362-63 (2004) ("Under this covenant James

would not merely be prevented from engaging in work similar to that which he did for

VisionAIR at VisionAIR competitors; James would be prevented from doing even wholly

unrelated work at any firm similar to VisionAIR."); Hartman v. W.H. Odell & Assocs.,

117 N.C. App. 307, 317, 450 S.E.2d 912, 920 (1994) (noting that an overly broad non-

competition agreement banning any association with competitors was unreasonable

because it would prevent one from working even as a custodian for any "entity" which

provided the same services as the former employer).

22. Plaintiff counters that section (b)(i) of the Non-competition Restriction

should be read as incorporating the provision of section (b)(ii) that prohibits Former

Employee Defendants from "otherwise provid[ing] any services that are similar to or

competitive with services offered by Employer." Plaintiff argues that read in this fashion,

section (b)(i) only prohibits the Former Employee Defendants providing services that are

"similar to or competitive" with the services offered by Plaintiff.23 Plaintiff's suggested

construction, however, does not square with the structure of the covenants. Sections (b)(i)

and (b)(ii) are separate restrictions, addressing different subjects, and each section is

capable of being interpreted independent of the other's existence. As each provision

23 Pl.'s Br. Opp. to Companion Mot. to Dismiss pp. 8-9. stands on its own, the "similar or competitive" language of section (b)(ii) has no relevance

to the Court's interpretation of section (b)(i). Even if the Court believed the language in

section (b)(ii) created an ambiguity as to the meaning of section (b)(i), such ambiguity

would be construed against Plaintiff as it was the drafting party. Reichhold Chems., Inc.

v. Goel, 146 N.C. App. 137, 153, 555 S.E.2d 281, 291 (2001).

23. The Court concludes that the Non-competition Restriction in the At-Will

Agreement is overly broad and is unenforceable. Clinical Staffing, Inc. v. Worldwide

Travel Staffing, 60 F. Supp. 3d 618, 625 (E.D.N.C. 2013). Therefore, Moving Defendants'

Motions to Dismiss Count I of the Amended Complaint should be GRANTED.

ii. The Non-Compete Agreement.

24. The Non-competition Restriction in the Non-Compete Agreement provides as

NON-COMPETE COVENANT. Worker will not compete24 with Sandhills Home Care for a period of one (1) year after Worker's separation from Sandhills Home Care within the geographical area that defined by a 100 mile radius of Sandhills Home Care, LLC, 401 E. Third Street, Ste. 3C, Pembroke, N.C., 28372.

Further, Worker agrees for a period of one (1) year from the date of Worker's separation from Sandhills Home Care not to perform any work or services for any customer or account for which Sandhills Home Care or its agents, including Worker, performed work or services during the six months preceding the date of Worker's separation.

25. Here, the covenant appears to provide two different Non-competition

Restrictions. The former employee is prohibited for one year from: (a) holding any ownership

interest in, operating, managing, or advising a home health aide business or any other

business that performs substantially the same services as Sandhills within 100 miles of

24 The Non-Compete Agreement defines the word "compete"as "holding any ownership interest in,

operating, managing, or advising a home health aide business or any other business that performs substantially the same services as Sandhills Home Care." Non-Compete Agreement, p. 2. Pembroke, North Carolina, and; (b) performing work or services for any of Sandhills'

customers for whom Sandhills provided services during the six months prior to the

employee's separation.

26. Moving Defendants claim the 100-mile restriction is unenforceable because it

is greater than reasonably necessary to secure the protection of the business or goodwill of

Sandhills. In determining the reasonableness of a territorial restriction, the Court considers:

(1) the area of the restriction, (2) the area assigned to the employee, (3) the area where the

employee actually worked or was subject to work, (4) the area in which the employer

operated, (5) the nature of the business involved, and (6) the nature of the employee's duty

and his knowledge of the employer's business operation. Clyde Rudd & Associates, Inc. v.

Taylor, 29 N.C. App. 679, 684, 225 S.E.2d 602, 605 (1976).

27. The Amended Complaint contains specific allegations that Plaintiff provided

home care to customers "in and around Robeson County, North Carolina,"25 and that

"Plaintiff, through its employees, provides home care to its customers within a radius of

approximately 100 miles from Pembroke, North Carolina."26 The Amended Complaint does

not allege the specific locations in or around Pembroke in which the Former Employee

Defendants had patients or performed services for Sandhills, or that the Former Employee

Defendants had contact with patients other than their own. Nevertheless, Plaintiff has

alleged that it provides services to patients within 100 miles of Pembroke, North Carolina.

Taking that allegations as true for purposes of this motion, the Court cannot conclude that

the 100 mile geographic restriction in the first paragraph of the covenant is unreasonable at

this stage of the proceeding. See Kinston Med. Specialists, P.A. v. Bundle, 2015 NCBC LEXIS

48,*9 (N.C. Super. Ct. 2015) (holding that the restriction of working in Lenoir, Duplin, Jones,

25 Am. Compl. ¶ 17 26 Id. at ¶ 20. Greene, Onslow, and parts of Wayne County was sufficiently supported by Complaint

alleging that the plaintiff's medical practice encompassed "Eastern North Carolina" to

survive a 12(b)(6) motion to dismiss).

28. Defining "compete" as including "holding any ownership interest in" or

"advising" any home health business, however, is a different matter. The phrase "holding

any ownership interest in," read literally, would prohibit the employee from owning shares

of a mutual fund that had a tiny holding in a publicly-traded home health care company. The

word "advising" is not defined in the Non-Compete Agreement, but also is broad enough to

sweep within it all sorts of employment and other services that would not impinge on

Plaintiff's interests in any way. For example, an employee might become employed by an

interior design or decorating business that advises a home health care provider on decorating

its corporate offices, or a technology company providing consulting services to a home health

care provider regarding its computer network needs. Plaintiff would not be protecting its

legitimate interests by preventing the Former Employee Defendants from holding such

positions, even if these positions brought them into contact with Plaintiff's competitors.27

"[W]here an employee has [ ] customer contact, the employer has a legitimate business

interest in preventing the employee from moving into an identical position with identical

duties with a competitor vis-à-vis such customers." Clinical Staffing, Inc., 60 F. Supp. 3d at

624; see also Medical Staffing Network, Inc., 194 N.C. App. at 656, 670 S.E.2d at 327

("[R]estrictive covenants are unenforceable where they prohibit the employee from engaging

in future work that is distinct from the duties actually performed by the employee.");

27 In determining whether a restrictive covenant protects the legitimate interests of an employer,

Courts must also consider ""the nature of the employee's duty and his knowledge of the employer's business operation." Hartman, 117 N.C. App. at 312, 450 S.E.2d at 917; Okuma Am. Corp. v. , Bowers, 181 N.C. App. 85, 91-92, 638 S.E.2d 617, 621-22 (2007) (Restrictive covenant prohibiting vice president from working for direct competitors in broad geographic region could be reasonable). Hartman, 117 N.C. App. at 317, 450 S.E.2d at 920 (non-competition agreement banning any

association with competitors was unreasonable because it would prevent one from working

even as a custodian for any "entity" which provided the same services as the former

employer). Accordingly, although the geographic region might be reasonable, Plaintiff has

not alleged any facts that would support the broad prohibition on the Former Employee

Defendants holding any type of ownership interest in or advising Plaintiff's competitors in

fields unrelated to the former employee's work for Plaintiff.

29. The second paragraph of the Non-compete Restriction prohibits the former

employee, for one year, from performing "any work or services for any customer or account"

which Sandhills had serviced in the six months prior to termination of employment. Nowhere

in the Non-Compete Agreement is the term "work or services" defined, and it is not expressly

restricted to providing nursing or home care services. This restriction prohibits the former

employee from providing any type of service for any of Plaintiff's clients or customers,

regardless of whether or not the former employee had any contact with that customer. In

Clinical Staffing, Inc. v. Worldwide Travel Staffing, the court refused to enforce a nearly

identical restriction on the plaintiff's former nursing employees, holding:

As written, the covenant not to compete prohibits the former [ ] employees from providing any service of any kind to "any [ ] client or individual . . . for a period of (6) six months from [the employee's] termination date." [D.E. 22-1]. Moreover, the restriction applies not only to those clients or individuals who have interacted with the former [ ] employee, but to any [ ] client anywhere in the world. Thus, for example, a [ ] employee who signed this non-competition provision could not provide food preparation services, custodial services, or secretarial services to any "[ ] client or individual" anywhere in the world for six months. As written, the non-competition provision is overbroad as to terms and unenforceable.

60 F. Supp. 3d at 625 (citations omitted). Such a broad ban is an unreasonable and

unenforceable restriction that fails to narrowly protect Sandhill's legitimate business

interests. 30. The Court concludes that the Non-competition Restriction in the Non-Compete

Agreement is unenforceable, and that Moving Defendants' Motions to Dismiss Count II of the

Amended Complaint should be GRANTED.

B. Non-solicitation Restrictions.

i. The Non-Compete Agreement.

31. Plaintiff alleges Shanita Harris, Condola Carbough, Moesha Holt, Kortney

Jacobs, Jennifer Knight, Natalie Locklear, Summer McLaughlin and Joanna Mishue violated

the Non-solicitation Restriction in the Non-Compete Agreement (Count III). The Non-

solicitation Restriction of the Non-Compete Agreement appears in the first paragraph of

section 2, entitled "Non-Solicitation Covenant", and provides as follows:

For a period of one (1) year from and after termination of Worker's separation from Sandhills Home Care, Worker will not solicit or attempt to procure the customers, accounts, or business that are a part of the book of business of Sandhills Home Care at the date of Worker's separation from Sandhills Home Care. Worker further agrees for a period of one (1) year from and after Worker's separation not to solicit any prospective customer whom Worker or Sandhills Home Care (or its agents) has solicited within the six months immediately preceding separation. Moving Defendants argue the Non-solicitation Restriction is unenforceable because it is not

tied to a particular geographic region, and because it is overly broad in prohibiting the

soliciting of customers and prospective customers with whom the Former Employee

Defendants did not have personal contact.28

32. Like non-competition provisions, valid non-solicitation provisions must be: (1)

in writing, (2) entered into at the time and as part of the contract of employment, (3) based

on valuable consideration, (4) reasonable both as to the time and territory embraced in the

restrictions, (5) fair to the parties, and (6) not against public policy. Aeroflow Inc. v. Arias,

28 Companion Br. Supp. of Mot. to Dismiss p. 5. 2011 NCBC LEXIS 21, *24 (N.C. Super. Ct. 2011). Although their elements are identical,

North Carolina courts are more willing to enforce non-solicitation provisions targeted to the

former employer's customers or prospective customers than provisions prohibiting entirely

the former employee from working for certain employers or in certain regions. See

Kuykendall, 322 N.C. at 658, 370 S.E.2d at 385 (1998).

33. Preliminarily, Moving Defendants' argument that the Non-solicitation

Restriction cannot be enforced because it does not apply to a particular geographic region

fails. The North Carolina Court of Appeals has expressly rejected this argument. Farr

Assocs., Inc., 138 N.C. App. at 281, 530 S.E.2d at 882. Rather, North Carolina's courts will

enforce a covenant prohibiting a former employee from soliciting his former employer's

customers even when not tied to a specific geographic region where "the terms and conditions

of this contract clause were reasonably necessary to protect the employer's legitimate

business interests." Triangle Leasing Co., 327 N.C. at 229, 393 S.E.2d at 857 ; see also Wade

S. Dunbar Ins. Agency, Inc. v. Barber, 147 N.C. App. 463, 469, 556 S.E.2d 331, 335 (2001);

Superior Performers, Inc. v. Meaike, 2014 U.S. Dist. LEXIS 50302 *32-33 (M.D.N.C. April

11, 2014) ("The covenant in this case utilizes an employee-based restriction, rather than a

geographic restriction, which North Carolina courts have also upheld when the overall effect

is reasonable."). A customer-based restriction on solicitation is analyzed in much the same

manner as a geographic restriction, taking into consideration many of the same factors and,

particularly, the time period of the restriction. Wade S. Dunbar Ins. Agency, 147 N.C. App.

at 469, 556 S.E.2d 335; Farr Assocs., 138 N.C. App. at 281-82, 530 S.E.2d at 882.

34. The courts have differed, however, as to whether a non-solicitation covenant

can prohibit contact with all of a former employer's customers, or just those customers or

prospective customers with whom the employee had personal contact. Compare Farr Assoc.,

138 N.C. App. 276, 282, 530 S.E.2d 878, 882 ("[A] client-based limitation cannot extend beyond contacts made during the period of the employee's employment")with Triangle

Leasing, 327 N.C. at 229, 393 S.E.2d at 857 (enforcing restrictive covenant prohibiting former

employee from "soliciting the business of plaintiff's known customers in areas in which the

company operates") and Wade S. Dunbar Ins. Agency, 147 N.C. App. 463, 469, 556 S.E.2d

331, 335 (covenant "restrict[ing] defendant, for two years, from soliciting any customers

having an active account with plaintiff at the time of his termination or prospective customer

whom defendant himself had solicited within the six months immediately preceding his

termination" enforceable).

35. The Non-solicitation Restriction in the Non-Compete Agreement prohibits the

Former Employee Defendants, for one year, from soliciting "the customers, accounts, or

business that are a part of the book of business of Sandhills Home Care at the date of

Worker's separation," and from soliciting prospective customers that Sandhills or the former

employee had solicited within the six months immediately preceding termination of

employment. Accordingly, the Former Employee Defendants are restricted from soliciting

any of Plaintiff's customers, whether or not the employee serviced or had contact with the

customer. Plaintiff provides home health care only "to customers in and around Robeson

County, North Carolina" within approximately 100 miles of Pembroke, North Carolina.

These allegations suggest that Plaintiff has a relatively small and easily identified set of

customers. At this very early stage of the case and based upon the pleadings alone, the Court

cannot conclude that the Non-solicitation Restriction in the Non-Compete Agreement is

unreasonable simply because it prohibits the Former Employee Defendants from soliciting

customers with whom they may not have had personal contact during employment.

36. The Non-solicitation Restriction also prohibits the Former Employee

Defendants from soliciting "prospective customers" that they personally, or that Plaintiff,

solicited for services during the six months prior to the employee's termination. This restriction is too broad, particularly in light of the fact that "prospective customers" solicited

by Plaintiff, but not personally by the Former Employee Defendants, are much less easily

identified. The alleged reach of Plaintiff's operations means that the Former Employee

Defendants would be restricted from attempting to solicit home health care services from

individuals whom Plaintiff itself was unable to secure as customers, and who live far outside

of the area the individual former employee serviced. In Hejl v. Hood, Hargett & Assocs., 196

N.C. App. 299, 307, 674 S.E.2d 425, 430, (2009), the Court of Appeals held a similar

restriction to be unreasonable and unenforceable, concluding that:

[T]he Agreement's restrictive covenant reaches not only current and former customers of Defendant, but also includes any person, firm, or entity to whom Defendant had merely quoted a product or service. Defendant's attempt to prevent Plaintiff from obtaining clients where Defendant had failed to do so, is an impermissible restraint on Plaintiff. Non-compete agreements may be directed at protecting a legitimate business interest. But in the case before us, where the Agreement reaches not only clients, but potential clients, and extends to areas where Plaintiff had no connections or personal knowledge of customers, the Agreement is unreasonable.

The Court concludes that Plaintiff has failed to allege a legitimate business interest in

restricting the Former Employee Defendants from calling on prospective customers who they

did not personally solicit.

37. While the language prohibiting the solicitation of prospective customers is

unreasonably broad, it does not render the entire Non-solicitation Restriction unenforceable.

Rather, that provision is a separate and divisible obligation contained in a separate sentence

of the covenant, and is not necessary to a logical and unambiguous interpretation of the

obligation in the first sentence prohibiting the solicitation of Plaintiff's actual customers.29

Under the "strict blue pencil doctrine," North Carolina courts may specifically enforce

29 While the prohibition on soliciting Plaintiff's prospective customers the former employee personally

solicited during their final six months of employment arguably would be reasonable, the Court concludes that this obligation cannot be separated from the remainder of the second sentence. divisible or separable sections of restrictive covenants while striking portions that are

unenforceable. Beverage Sys. of the Carolinas, LLC v. Associated Bev. Repair, LLC, 2016

N.C. LEXIS 177, *6, 784 S.E.2d 457, 460 (N.C. 2016). Accordingly, the Court will strike the

second sentence of the Non-solicitation Restriction that reads "Worker further agrees for a

period of one (1) year from and after Worker's separation not to solicit any prospective

customer whom Worker or Sandhills Home Care (or its agents) has solicited within the six

months immediately preceding separation." Superior Performers, Inc., 2014 US Dist. LEXIS

50302 *39 (applying blue-pencil doctrine and holding "[a]lthough it is not separated off by

number or in a different clause, the language can readily be struck through and the rest of

the restrictive covenant still makes sense and stands on its own"). Accordingly, the Moving

Defendants' Motions to Dismiss Count III of the Amended Complaint should be DENIED in

part in that the Court concludes that the first sentence of the Non-solicitation Restriction is

enforceable, and the second sentence of the Non-solicitation Restriction is not enforceable but

can be struck from the covenant. Accordingly, the Moving Defendants' Motions to Dismiss

Count III of the Amended Complaint should be GRANTED with regard to the second sentence

of the Non-solicitation Restriction.

ii. The At-Will Agreement.

38. Plaintiff alleges Mary Jacobs, Casey Locklear, and Andrianna Emmanuel each

breached the Non-solicitation Restriction in the At-Will Agreement (Count IV). The Non-

solicitation Restriction in the At-Will Agreement provides that for a period of one year

following the termination of employment, the Former Employee Defendants cannot:

(ii) solicit the sale of, sell, or otherwise provide any services that are similar to or competitive with services offered by Employer, to any person, company or entity which was a client or a potential client of Employer for such services and with whom Employee had direct contact with during the two (2) years prior to Employee's separation; (iii) solicit, attempt to persuade or communicate with any client of Employer or any potential client of Employer with whom Employee had direct contact with during the two (2) years prior to Employee's separation of employment with Employer, to discontinue, limit or otherwise interfere with business relationship between Employer and said client(s).

39. Moving Defendants argue that the time period of these provisions, in

conjunction with the client-based restriction, make them unreasonable. Moving

Defendants base this argument on the addition of the two year "look-back" period to the

one year post-termination period, which creates a three year restriction on the solicitation

of all Plaintiff's customers. "When a non-compete agreement reaches back to include

clients of the employer during some period in the past, that look-back period must be

added to the restrictive period to determine the real scope of the time limitation." Farr

Assocs., Inc., 138 N.C. App. at 280, 530 S.E.2d at 881; Wachovia Ins. Servs. v. McGuirt,

2006 NCBC LEXIS 25, *24 (N.C. Super. Ct. 2006). North Carolina courts have held that

the time restriction of a non-solicitation provision restricting communication with an

entire customer base should include the look-back period when the look-back period also

applies to the entire customer base. Farr Assocs., Inc., 138 N.C. App. at 281, 530 S.E.2d

at 882; Evo Corp. v. Poling, 2015 NCBC LEXIS 83, *14 (N.C. Super. Ct. 2015); Investors

Trust Co. v. Whitlock, 2015 NCBC LEXIS 46, *20 (N.C. Super. Ct. 2015). In McGuirt,

however, this Court chose not to consider a covenant tailored to capture only those clients

the employee "serviced" during the two years preceding his termination as a look-back

period that added time to a non-solicitation restriction applicable to "any business,

clients, customers or prospects of [the employer]." 2006 NCBC LEXIS at *27 ("Unlike the

'look back' provision in Farr, the language here does not attempt to bring within its ambit

all of [employer's] clients within the two years preceding McGuirt's termination."). 40. Here, the non-solicitation provision applies only to customers and

potential customers with whom the former employee had "direct contact" during the two

years prior to their termination of employment. Moving Defendants argue that

restricting solicitation of potential clients with whom a former employee had "direct

contact" is much broader than restricting solicitation of clients "serviced" by the employee.

Moving Defendants contend that "direct contact" could include potential clients with

whom Former Employee Defendants "talked to . . . on the phone, but did not actually

provide care to," and that undefined term "potential clients" has "an almost universal

application."30 Moving Defendants, therefore, urge the Court to interpret the non-

solicitation provision as an ultra-broad three year restriction on the solicitation of all

Plaintiff's current clients in addition to any of Plaintiff's clients or potential clients from

the preceding two years.

41. The Court declines to apply such a sweeping interpretation to the

restriction. Plaintiff alleges that its business interests need protection because its home

health care providers have developed close, personal relationships with the patients they

service. The allegations also establish that Plaintiff's employees service, and develop

these deep relationships with, a single client or a very small number of clients. In fact,

Plaintiff alleges that all but one of the Former Employee Defendants in this case serviced

just a single client. Even including those customers and potential clients with whom the

Former Employee Defendants only had a limited "direct contact" does not expand the

reach of the restriction beyond that which is reasonably necessary. Since the two year

look-back provision is tailored to capture only those clients with whom the Former

Employee Defendants had direct contact, the provision is sufficiently narrow to prevent

30 Companion's Reply Br. p. 4. any potential loss of customers without unreasonably restricting the former employee's

ability to work in the home health care field. Evo Corp., 2015 NCBC LEXIS 83 at *14

(N.C. Super. Ct. 2015) (holding that when the employee's knowledge of customers is the

primary concern, the territory of restrictive covenant should be restricted to those areas

in which the employee made contacts).31 The Court concludes that the Non-solicitation

Restriction in the At-Will Agreement is reasonable and enforceable, and that the Moving

Defendants' Motions to Dismiss Count IV of the Amended Complaint should be DENIED.

C. Non-inducement Restrictions.

42. Plaintiff alleges Shanita Harris, Condola Carbough, Moesha Holt, Kortney

Jacobs, Jennifer Knight, Natalie Locklear, Summer McLaughlin and Joanna Mishue each

breached the Non-Compete Agreement by violating its Non-inducement Restrictions (Count

V), and Mary Jacobs, Casey Locklear, and Andrianna Emmanuel each breached the At-Will

Agreement by violating its Non-inducement Restrictions (Count VI). The Non-inducement

Restrictions are contracts "in restraint of trade" that the Court must carefully scrutinize for

reasonableness. See Kuykendall, 322 N.C. at 658, 370 S.E.2d at 385 (1998). Like non-

solicitation of customer restrictions, non-inducement restrictions are more easily enforced

than non-competition restrictions. Id. Courts in North Carolina have recognized that

reasonable restrictions on a former employee's right to solicit an employer's current

employees are enforceable. Kennedy v. Kennedy, 160 N.C. App. 1, 11, 584 S.E.2d 328, 335

(2003) ("[T]he covenant prohibiting Carroll from soliciting and hiring plaintiff's former

employees for the three-year period does not violate public policy."); Superior Performers,

31 Even if the Court were to interpret the Non-solicitation Restriction as encompassing a three year

period, that period is well within the outer limit of restrictive covenant enforceability. See Eng'g Assocs., Inc. v. Pankow, 268 N.C. 137, 139, 150 S.E.2d 56, 58 (1966) (holding that a five-year restrictive covenant was reasonable). Inc., 2014 U.S. Dist. LEXIS 50302 at *33-36 (Two year restriction on soliciting former

employer's current employees reasonable).

43. The Non-inducement Restriction in the Non-Compete Agreement32 appears in

the second paragraph of section 2, entitled "Non-Solicitation Covenant", and provides as

[F]or a period of one (1) year after Worker's separation from Sandhills Home Care, Worker will not directly or indirectly solicit, induce, or attempt to induce any Worker of Sandhills Home Care to terminate his or her employment with Sandhills Home Care.

44. A restriction on solicitation of a former employer's employees is subject to the

same requirements as other restrictive covenants. Superior Performers, Inc., 2014 U.S. Dist.

LEXIS 50302 at *18. Here, the Non-inducement Restriction is in writing and was based on

valuable consideration. The Court also concludes that Plaintiff has alleged a protectable

business interest. Kennedy, 160 N.C. App. at 12, 584 S.E.2d at 335 (Dentistry practice had

legitimate interest in protecting its current staff from solicitation by former employee where

current employees had long-term, personal relationships with practice's patients).

Accordingly, the only issues for determination are whether the Non-inducement Restriction

is reasonable and whether it violates public policy. In determining whether a restrictive

covenant violates public policy, the Court must consider whether an employer's right to

protect itself from competition results in an undue hardship on employees that is greater

than necessary to protect the interests of the employer. Phelps Staffing, LLC v. C.T. Phelps,

Inc., 226 N.C. App. 506, 510, 740 S.E.2d 923, 927 (2013).

32 Defendants have not addressed any specific argument in their briefs towards the Non-inducement

Restriction, but argue instead that the entire NON-SOLICITATION COVENANT is unenforceable. Nevertheless, the Court will review the restriction. 45. The one year prohibition on inducing Plaintiff's current employees to terminate

their employment with Plaintiff imposed by the Non-Compete Agreement reasonably

protects Plaintiff's interests and does not result in an unduly great hardship on the Former

Employee Defendants. The Court concludes that the Non-inducement Restriction in the Non-

Compete Agreement is reasonable and enforceable, and that the Moving Defendants' Motions

to Dismiss Count V of the Amended Complaint should be DENIED.

46. The Non-inducement Restriction in the At-Will Agreement provides as follows:

NON-INDUCEMENT. Employee understands that any attempt on the part of Employee to induce others to leave Employer's employ, or any effort by Employee to interfere with Employer's relationship with other employees would be harmful and damaging to Employer. Therefore, Employee expressly agrees that during the term of employment, and for a period of one (1) year thereafter, he/she will not in any way, directly or indirectly, (1) induce or attempt to induce any employee to quit employment with Employer; (2) interfere or disrupt Employer's relations with other employees; (3) solicit or entice any person employed with Employer. In the event that Employee does employ an employee of Employer in violation of this Agreement, Employer shall have the right to seek and obtain a Temporary Restraining Order, ex parte, and other injunctive or equitable relief as is necessary to protect its interests. 47. Moving Defendants contend that the Non-inducement Restriction should not

be enforced, and Plaintiff's claim for breach dismissed, because it violates North Carolina

public policy. Defendants argue that the prohibiting the Former Employee Defendants from

inducing co-workers to terminate employment with Plaintiff and from "interfere[ing] or

disrupt[ing]" Plaintiff's relationship with co-workers violates a worker's right to engage in

concerted activity under the National Labor Relations Act, 29 U.S.C. § 157, and suppresses

competition within North Carolina's home healthcare market, in violation of G.S. § 75-1.33

Defendants, however, provide no case law authority for, and make no substantial argument

33 Companion Br. Supp. of Mot. to Dismiss pp. 8-9. regarding, either proposition. Likewise, Plaintiff devotes four sentences of its brief to

responding to Defendants' contention, and cites to no authority in opposition. Defendants'

argument that the Non-inducement Restriction violates G.S. § 75-1 is significantly

undermined by the fact that, as noted above, North Carolina's appellate courts have held that

such restrictions on inducing a former employer's employees can be enforceable. In addition,

Defendant has cited to no source for the contention that there is a North Carolina public

policy in favor of protecting employee concerted activity. Accordingly, at this stage of the

action, the Court concludes that Defendants' motions to dismiss Count VI should be DENIED.

D. Enforceability of Mary Jacob's Restrictive Covenants.

48. Defendant Mary Jacobs claims that she began working for Plaintiff six months

before Plaintiff made her sign the At-Will Agreement without providing her any new

consideration. Restrictive covenants agreed upon and entered into after the execution of

one's employment agreement are invalid if not supported by new consideration independent

of continued employment. Young v. Mastrom, Inc., 99 N.C. App. 120, 123, 392 S.E.2d 446,

448 (1990).

49. In reviewing a 12(b)(6) Motion to Dismiss, the Court is to liberally construe

whether the allegations of the complaint, treated as true, are sufficient to state a claim upon

which relief may be granted under some legal theory. The Amended Complaint alleges that

Plaintiff hired Mary Jacobs "in the capacity as an office manager in January, 2015." In

response, Mary Jacobs has submitted an affidavit stating that she was initially employed by

Plaintiff around July 28, 2014. Because the affidavit contains information outside of the

pleadings, the Court chooses to exclude the affidavit as provided for in Rule 12(b). Treating

the allegations of the Amended Complaint as true, Plaintiff has alleged that Mary Jacobs

entered into the restrictive covenants at the time she was hired as an office manager. Since

Plaintiff alleges that the covenants are supported by the consideration of initial employment, Mary Jacobs' Motion to Dismiss the breach of contract claims against her for lack of

consideration should be DENIED.

E. Tortious Interference.

50. In Count VII of Verified Amended Complaint, Plaintiff alleges that Defendants

tortiously interfered with Plaintiff's contracts with it customers by inducing them to

"terminate their contractual relationship with the Plaintiff and to hire the Defendant

Companion" to provide their home health care.34 In Count VIII, Plaintiff alleges that Mary

Jacobs, Harris, Companion and Graham interfered with Plaintiff's contracts by "intentionally

induc[ing] the Plaintiff's employees to terminate their contractual relationship with Plaintiff

and to obtain employment with Companion."35 In order to prevail on a claim for tortious

interference with contract, a plaintiff must establish the following: (1) a valid contract existed

between the plaintiff and a third party that conferred upon plaintiff contractual right against

the third party; (2) the defendant was aware of the contract; (3) the defendant intentionally

induced the third party not to comply with the contract; (4) the defendant did so without

justification and (5) actual injury to plaintiff resulted. Kuykendall, 322 N.C. at 661, 370

S.E.2d at 387 (1988); White v. Cross Sales & Eng'g Co., 177 N.C. App. 765, 768–69, 629 S.E.2d

898, 901 (2006). "Interference with a contract is justified if it is motivated by a legitimate

business purpose, as when the plaintiff and the defendant, an outsider, are competitors."

Beverage Sys. of the Carolinas, LLC v. Associated Bev. Repair, LLC, 784 S.E.2d 457, 462,

2016 N.C. LEXIS 177, *13 (N.C. 2016) (internal quotations omitted).

i. Tortious Interference with Customer Contracts.

51. Plaintiff alleges that Defendants interfered with "valid contracts and business

relationship (sic) [ ] between the Plaintiff and its customers conferring upon the Plaintiff a

34 Am. Compl. ¶ 79. 35 Id. ¶ 84. contractual right to receive payment in consideration for providing home care services to the

Plaintiff's customers."36 Defendants argue that Plaintiff's claim must fail because Plaintiff

has not identified specific customers with whom Defendants interfered, because Plaintiff does

not allege that it had contracts "to provide its patients with home health care for a definite

period of time," and because Plaintiff did not allege Defendants prevented Plaintiff from

receiving any payments it was due from its clients.37 Plaintiff does not expressly address

this claim in its brief.

52. While specificity in pleading probably is the better course, Defendants have

pointed the Court to no authority that would support the position that Plaintiff is required

to allege the particular clients with whom Defendants interfered in order to survive a motion

to dismiss. In addition, the fact that the client relationships at issue may have been

terminable at-will, and not for a definite term, is not fatal to the claim for tortious

interference at this early stage of the case. S. Fastening Sys. v. Grabber Constr. Prods., 2015

NCBC LEXIS 42, *22-23 (N.C. Super. Ct. 2015) (fact that customer relationships with which

the defendant allegedly interfered were at will was not basis for dismissal; citing Childress

v. Abeles, 240 N.C. 667, 678, 84 S.E.2d 176, 184 (1954)). Finally, although Plaintiff does not

allege that Defendants interfered with payments it was due from its customers, the

allegations that Plaintiff had existing customer relationships with which Defendants

interfered is sufficient at this stage to survive dismissal of the claim. Accordingly, the Court

concludes and that the Moving Defendants' Motions to Dismiss Count VII of the Amended

Complaint should be DENIED.

36 Am. Compl. ¶ 77. 37 Companion's Br. Supp. Mot. to Dismiss pp. 13-14. ii. Tortious Interference with Employee Contracts.

53. Plaintiff alleges that it had contracts with the Former Employee Defendants

in which they agreed "not to engage in certain conduct as set forth in the contracts" and that

Companion, Graham, Mary Jacobs and Harris, "intentionally induced Plaintiff's employees

to terminate their contractual relationship with Plaintiff to obtain employment with

Companion."38 Plaintiff alleges that the Defendants engaged in this conduct "without

justification" in a "malicious and blatant attempt to destroy the Plaintiff's business."39

Defendants argue that Plaintiff's claim should be dismissed because each employee's at-will

employment status with Plaintiff precludes a valid claim of tortious interference with their

employment contracts, because Plaintiff's failed to allege that the Companion, Graham, Mary

Jacobs, and Harris had knowledge of the restrictive covenants, and that Plaintiff has failed

to allege that Defendants lacked a legitimate business purpose for interfering with the

employment agreements.

54. Moving Defendants correctly point out that an at-will employee may end her

employment at any time for any reason and that such an agreement is terminable, with or

without cause, at the will of either party. Our supreme court, however, has held that a claim

for interference with contract can be based on an at-will employment relationship. Peoples

Sec. Life Ins. Co. v. Hooks, 322 N.C. 216, 221, 367 S.E.2d 647, 650 (N.C. 1988) ("The mere

fact that the plaintiff's employment contracts with the employees in question were

terminable at will does not provide the defendant a defense to the plaintiff's claim for tortious

interference.") (citing Childress, 240 N.C. at 678, 84 S.E. 2d at 184).

55. In addition, Plaintiff has alleged that the former employees had enforceable

agreements restricting them from competing and soliciting customers following termination

38 Am. Compl. ¶¶ 82, 84. 39 Id. at ¶ 85. of employment. Such agreements would support a claim for intentional interference with

contract even if the employee was at-will. Hooks, 322 N.C. at 221, 367 S.E.2d at 650 (finding

that the plaintiff could pursue claim for tortious interference with contract when at-will

employee had a non-compete covenant). Moving Defendants' contention that Plaintiff did not

allege knowledge of the agreements is simply wrong. In paragraph 41 of the Amended

Complaint, Plaintiff alleges that "[a]t all times relevant to the individual Defendants'

conspiracy, [ ] Graham and Companion were aware of the existence of the terms of the

individual Defendants' employment contracts with Plaintiff and consciously and knowingly

encouraged the individual Defendants to breach their contracts."40 Plaintiff also alleges that

the Former Employee Defendants "were aware of the contractual relationship (sic) each other

had with the Plaintiff."41 The Court deems these allegations true for the purpose of this

12(b)(6) analysis. Sutton, 277 N.C. at 98, 176 S.E.2d at 163.

56. Finally, Moving Defendants argue that Plaintiff has "failed to plead sufficient

facts to overcome [ ] Defendants' defense of legitimate business interest."42 The Court

interprets this as an argument that Plaintiff failed to plead that Defendants acted without

justification. In Sec. Life Ins. Co. v. Hooks the Supreme Court summarized the law regarding

this issue as follows:

A motion under Rule 12(b)(6) should be granted when the complaint reveals that the interference was justified or privileged. . . . "The privilege [to interfere] is conditional or qualified; that is, it is lost if exercised for a wrong purpose. In general, a wrong purpose exists where the act is done other than as a reasonable and bona fide attempt to protect the interest of the defendant which is involved." In determining whether an actor's conduct is justified, consideration is given to the following: the circumstances surrounding the interference, the actor's motive or conduct, the interests sought to be advanced, the social interest in protecting the freedom of action of the actor and the contractual interests of the other party. If the defendant's only motive is a malicious wish to injure the plaintiff, his actions are not justified. If, however,

40 Am. Compl. ¶ 41. 41 Id. at ¶ 83. 42 Companion's Br. Supp. Mot. to Dismiss pp. 15-16. the defendant is acting for a legitimate business purpose, his actions are privileged. Numerous authorities have recognized that competition in business constitutes justifiable interference in another's business relations and is not actionable so long as it is carried on in furtherance of one's own interests and by means that are lawful.

322 N.C. at 220-221, 367 S.E.2d at 650 (citations omitted).

57. Here, Plaintiff alleges that Graham and Companion knew about the terms of

the Former Employee Defendants' employment contracts with Plaintiff and "consciously and

knowingly encouraged the individual Defendants to breach their contracts,"43 and did so

"without justification" in a "malicious and blatant attempt to destroy the Plaintiff's

business."44 Although the distinction between seeking to destroy a competitor and a lawful

competitive interest may be blurry, the Court believes Plaintiff's allegation of a specific plan

or scheme to destroy Plaintiff's business goes beyond reasonable competitive behavior. The

Court must accept the Plaintiff allegations, and concludes that Moving Defendants' Motions

to Dismiss Count VIII of the Amended Complaint should be DENIED.

F. Unfair and Deceptive Trade Practices.

58. In Count IX, Plaintiff claims that Defendants violated the North Carolina

Unfair and Deceptive Trade Practices Act, G.S. § 75-1.1 et seq. (the "UDTPA"). Plaintiff

alleges that the Former Employee "Defendants used their influence and close contact with

the Plaintiff's customers to entice and persuade the Plaintiff's customers to terminate their

business relationship with Plaint for the direct benefit of the [Former Employee] Defendants

and Companion."45 Defendants contend that Plaintiff's claim should be dismissed because it

"does not fit within the paradigm of business-versus-business cases under [the] UDTPA"

43 Am. Compl. ¶ 41. 44 Id. at ¶ 85. 45 Id. at ¶ 89. because Companion "was not engaged in commercial dealings with Plaintiff."46 Defendants

also argue that Plaintiff has not alleged that Plaintiff engaged in an unfair or deceptive act.47

59. G.S. § 75-1.1 provides that "[u]nfair methods of competition in or affecting

commerce, and unfair and deceptive acts or practices in or affecting commerce, are declared

unlawful." To succeed on a claim under G.S. § 75-1.1, a plaintiff must show that: (1) the

defendant committed an unfair or deceptive act or practice, (2) the action in question was in

or affecting commerce, and (3) the act proximately caused injury to the plaintiff. Capital

Res., LLC v. Chelda, Inc., 223 N.C. App. 227, 239, 735 S.E.2d 203, 212 (2012). "A practice is

unfair when it offends established public policy as well as when the practice is immoral,

unethical, oppressive, unscrupulous, or substantially injurious to consumers." Huff v. Autos

Unlimited, 124 N.C. App. 410, 413, 477 S.E.2d 86, 88 (1996). "A practice is deceptive if it has

the capacity or tendency to deceive; proof of actual deception is not required." Id. Whether

a trade practice is unfair or deceptive depends upon the facts of each case and their impact

on the parties. Marshall v. Miller, 302 N.C. 539, 548, 276 S.E.2d 397, 403 (1981). Although

its drafters included "in or affecting commerce" in G.S. § 75-1.1 to benefit consumers, North

Carolina case law provides that "in or affecting commerce" extends to businesses-to-business

affairs in the context of a tortious interference with contract claim. Hajmm Co. v. House of

Raeford Farms, Inc., 328 N.C. 578, 592, 403 S.E.2d 483, 492 (1991); Kuykendall, 322 N.C. at

665, 370 S.E.2d at 389.

60. Defendants' first contention, that the UDTPA does not extend to claims arising

out of an employer interfering with its competitors' non-competition agreements, has been

squarely rejected by our appellate courts. Kuykendall, 322 N.C. at 664, 370 S.E.2d at 389;

Roane-Barker v. Southeastern Hosp. Supply Corp., 99 N.C. App. 30, 41, 392 S.E.2d 663, 670

46 Companion's Br. Supp. Mot. to Dismiss p. 18. 47 Id. at p. 20. (1990). Since Plaintiff has adequately alleged that Companion tortiously interfered with

Plaintiff's customer relationships and with its former employees' restrictive covenants,

Defendants' motion to dismiss on these grounds must be rejected. Additionally, Plaintiff's

specific allegation that Companion Defendants secretly conspired with Mary Jacobs and

Harris to solicit and entice Plaintiff's employees to work for, and bring their patients to,

Companion Home Care in a "plan or scheme to destroy Plaintiff's business,"48 supports an

inference of unfair and deceptive behavior that offends public policy. Since the Amended

Complaint, and its reference to Plaintiff's allegedly secret scheme to destroy Plaintiff's

business, must be deemed true in determining a 12(b)(6) motion to dismiss, Defendants'

Motions to Dismiss Count IX of the Amended Complaint should be DENIED.

G. Misappropriation of Trade Secrets.

61. Plaintiff alleges that Defendants misappropriated its trade secrets in violation

of the North Carolina Trade Secrets Protection Act, G.S. § 66-152, by providing to Companion

Defendants "information regarding the identity of the Plaintiff's customers as well as

information regarding [the] contractual relationship[s] between the Plaintiff and these

customers."49 (Count X). "A 'trade secret' by definition means business or technical

information, including but not limited to a formula, pattern, program, device, compilation of

information, method, technique, or process that derives independent or potential value from

not being generally known or readily ascertainable through independent development." GE

Betz, Inc. v. Conrad, 231 N.C. App. 214, 233, 752 S.E.2d 634, 649 (2013). "Misappropriation"

is defined as the acquisition, disclosure, or use of a trade secret of another without express

or implied authority or consent, unless such a trade secret was arrived at by independent

development, reverse engineering, or was obtained from another person with a right to

48 Am. Compl. ¶¶ 33-36. 49 Id. at ¶ 99. disclose the trade secret. G.S. § 66-152(1). A prima facie case for misappropriation may be

made by showing that the defendant (1) knew or should have known of the trade secret and

(2) had a specific opportunity to acquire the trade secret for use or disclosure or has actually

acquired, disclosed, or used the trade secret without express or implied consent of authority

from the owner. GE Betz, 231 N.C. App. at 233, 752 S.E.2d at 649. The trade secret must be

pleaded with particularity to enable a defendant to understand exactly what he is accused of

misappropriating and to allow the Court to decide whether a misappropriation has occurred.

Id. at 234, 752 S.E.2d at 649. Generally, information such as names or addresses of an

employer's customers gained during the performance of an employee's duties is not a trade

secret. Kadis v. Britt, 224 N.C. 154, 162, 29 S.E.2d 543, 548 (1944); Amerigas Propane, L.P.

v. Coffey, 2015 NCBC LEXIS 98, *33 (N.C. Super. Ct. 2015) ("Under North Carolina law,

customer information maintained in the memory of a departing employee is not a trade

secret.").

62. The Court concludes that Plaintiff's allegations do not even remotely support

a claim that the information regarding the names of customers that the former employees

serviced and the nature of the "contractual relationships" Plaintiff had with the customers

were trade secrets. The cases cited by Plaintiff in its brief involving compilations of customer

data including information such as pricing, bidding formulas, and customer ordering

histories are inapposite.50 Accordingly, Moving Defendant's motion to dismiss Count X of the

50 Pl.'s Br. Opp. Mot. to Dismiss p. 22-23; e.g., GE Betz, 231 N.C. App. at 234, 752 S.E.2d at 649 ("chemical formulations, pricing information, customer proposals, historical costs, and individualized sales data"); Sunbelt Rentals Inc. v. Head & Engquist Equip., L.L.C., 174 N.C. App. 49, 55, 620 S.E.2d 222, 227 (2005) ("preferred customer pricing, employees' salaries, equipment rates, fleet mix information, budget information and structure of the business"); South Fastening Sys. v. Grabber Constr. Prods., 2015 NCBC LEXIS 42, *11 (N.C. Super. Ct. 2015) ("confidential customer information such as customer contact information and customer buying preferences and history . . . confidential freight information, sales reports, prices and terms books, sales memos, sales training manuals, H. Breach of Fiduciary Duty.

63. In Count XI of the Amended Complaint, Plaintiff alleges the Former Employee

Defendants owed to Plaintiff, and breached, fiduciary duties by "engaging in conduct which

was not in the best interest of the Plaintiff and was specifically designed, in bad faith, to

damage Plaintiff and Plaintiff's business."51 Mary Jacobs, Shanita Harris, and Kourtney

Jacobs have moved to dismiss the claims for breach of fiduciary duty on the grounds that

they were mere employees of Plaintiff, and did not hold positions that created fiduciary

obligations to Plaintiff.

64. In order to establish a claim of breach of fiduciary duty, a plaintiff must show

(1) the existence of a fiduciary duty, and (2) that the fiduciary failed to "act in good faith and

with due regard to plaintiff's interests." White v. Consolidated Planning Inc., 166 N.C. App.

283, 293, 603 S.E.2d 147, 155 (2004). A fiduciary relationship arises when "there has been a

special confidence reposed in one who in equity and good conscience is bound to act in good

faith and with due regard to the interests of the one reposing confidence." Harrold v. Dowd,

149 N.C. App. 777, 784, 561 S.E.2d 914, 919 (2002). Such a fiduciary relationship "extends

to any possible case in which a fiduciary relationship exists in fact, and in which there is

confidence reposed on one side, and resulting domination and influence on the other." Dalton

v. Camp, 353 N.C. 647, 652, 548 S.E.2d 704, 707-708 (2001) (emphasis in original) (internal

citations omitted). The standard for establishing a fiduciary relationship is demanding.

"Only when one party figuratively holds all the cards—all the financial power or technical

information, for example—have North Carolina courts found that the 'special circumstance'

commission reports, and information concerning SFS's relationship with its vendors"); Koch Measurement Devices, Inc. v. Armke, 2013 NCBC LEXIS 45, *8 (N.C. Super. Ct. 2013) ("(a) customer lists including names, contact persons, addresses and phone number of Koch's customers; (b) the ordering habits, history and needs of Koch's customers and (c) Koch's pricing and inventory management strategies"). 51 Am. Compl. ¶¶ 103-09. of a fiduciary relationship has arisen." Highland Paving Co. v. First Bank, 227 N.C. App. 37,

42, 742 S.E.2d 287, 292 (2013) (quoting Crumley & Associates, P.C. v. Charles Peed &

Associates, P.A., 219 N.C. App. 615, 620-21, 730 S.E.2d 763, 767 (2012)). North Carolina

courts have held a typical employer/employee relationship insufficient to establish a fiduciary

duty. Dalton v. Camp, 353 N.C. at 652, 548 S.E.2d at 708. For a fiduciary duty to exist in

the employer-employee relationship it is not enough that the employee was one in whom the

employer placed confidence or who had a duty to act in good faith towards their employer.

Id. "[S]uch circumstances, . . ., define the nature of virtually all employer-employee

relationships." Id. Rather, the facts must show that the "employer … was somehow

subjugated to the improper influences or domination of his employee." Id.

65. Plaintiff concedes that "[a]s a general rule, the typical employer/employee

relationship is insufficient to establish a fiduciary relationship."52 Nevertheless, Plaintiff

contends that the Former Employee Defendants' "direct and constant contact" with Plaintiff's

clients placed the former employees in a position of "domination and influence" over

Plaintiff's customers and its business. While such customer contact demonstrates the

Plaintiff placed a certain level of confidence in the Former Employee Defendants to act in

good faith with regard to Plaintiff's interests, it does not place the former employees in a

position of domination and control over Plaintiff. The Court concludes that the allegations

in the Amended Complaint are not sufficient to place the relationships between Plaintiff and

Mary Jacobs, Shanita Harris, or Kourtney Jacobs outside of the typical employee-employer

relationship and do not support a claim that these three former employees owed a fiduciary

duty to Plaintiff. Accordingly, Mary Jacobs', Shanita Harris', and Kourtney Jacobs' motions

to dismiss Count XI of the Amended Complaint should be GRANTED.

52 Pl.'s Br. Opp. Jacobs' and Harris' Mot. to Dismiss p. 4. I. Conspiracy.

66. Plaintiff alleges that Defendants engaged in a civil conspiracy by soliciting and

organizing the mass resignations of the Former Employee Defendants as part of "a common

plan and scheme" to inflict injury upon Plaintiff.53 (Count XII). An action for civil conspiracy

exists when "there is an agreement between two or more individuals to do an unlawful act or

to do a lawful act in an unlawful way, resulting in injury inflicted by one or more of the

conspirators pursuant to a common scheme." Daniel Boone Complex, Inc. v. Furst, 43 N.C.

App. 95, 103, 258 S.E.2d 379, 386 (1979), disc. rev. denied, 299 N.C. 120, 261 S.E.2d 923

(1980). "It is well established that there is not a separate civil action for civil conspiracy in

North Carolina," rather "civil conspiracy is premised on the underlying act." Piraino Bros.,

LLC v. Atl. Fin. Group, Inc., 211 N.C. App. 343, 350, 712 S.E.2d 328, 333, (2011) (citations

and quotation omitted).

67. Defendants rely on Bottom v. Bailey, 2014 N.C. App. LEXIS 1348, 767 S.E.2d

883, 890 (2014), and argue that Plaintiff has made only conclusory allegations of a civil

conspiracy amongst individual Defendants that are not sufficient to support the claim.

Bottom, however, is readily distinguishable. In Bottom, the court affirmed the dismissal of

Plaintiff's conspiracy claim, holding that:

The claim suggests that defendants . . . conspired, but fails to allege how this conspiracy came to be, or when, or where, or why. The complaint asserts mere conclusions concerning the elements of civil conspiracy, without offering a scintilla of factual allegation in support of the claim.

Id.

68. Here, however, Plaintiff has made detailed allegations that the plan to

orchestrate a mass exodus of Plaintiff's employees and their subsequent hiring by Companion

was made between Mary Jacobs, Harris, and Companion in and around October, 2015, was

53 Am. Compl. ¶ 111. facilitated through clandestine contacts between Jacobs and Companion, and was for the

purpose of taking Plaintiff's customers serviced by the Former Employees and destroying

Plaintiff's business. While Plaintiff ultimately may not be able to prove these allegations,

the Court must accept them as true as this time. Since the Court has not dismissed some of

Plaintiff's claims that could form the basis for a civil conspiracy, it cannot dismiss the claim

for conspiracy. RoundPoint Mortg. Co. v. Florez, 2016 NCBC LEXIS 18, *55 (N.C. Super. Ct.

2016). Accordingly, Moving Defendant's motion to dismiss Count XII of the Amended

THEREFORE, IT IS ORDERED that:

a. The Motions to Dismiss Counts I and II of the Amended Complaint for breach of

contract claims is GRANTED.

b. The Motions to Dismiss Count III of the Amended Complaint for breach of contract

claims is GRANTED in part and DENIED in part. The Motions to Dismiss Count

III are DENIED as to the first sentence of the Non-solicitation Restriction. The

second sentence of the Non-solicitation Restriction is not enforceable but can be

struck from the covenant. Accordingly, the Motions to Dismiss Count III of the

Amended Complaint is GRANTED with regard to the second sentence of the Non-

solicitation Restriction.

c. The Motions to Dismiss Count IV of the Amended Complaint for breach of contract

claims are DENIED.

d. The Motions to Dismiss Count V of the Amended Complaint for breach of contract

are DENIED.

e. The Motions to Dismiss Count VI of the Amended Complaint for breach of contract

are DENIED. f. The Motions to Dismiss Count VII and VIII of the Amended Complaint for tortious

interference with customer contracts are DENIED.

g. The Motions to Dismiss Count IX of the Amended Complaint for unfair and

deceptive trade practices claim are DENIED.

h. The Motions to Dismiss Count X of the Amended Complaint for misappropriation

of trade secrets claim are GRANTED.

i. The Motions to Dismiss Count XI of the Amended Complaint for breach of

fiduciary duty claim are GRANTED.

j. The Motions to Dismiss Count XII of the Amended Complaint for civil conspiracy

claim are DENIED.

This the 1st day of August, 2016.

/s/ Gregory P. McGuire Gregory P. McGuire Special Superior Court Judge for Complex Business Cases