Satellite Industries, Inc. v. Keeling

396 N.W.2d 635, 1986 Minn. App. LEXIS 4988
CourtCourt of Appeals of Minnesota
DecidedNovember 25, 1986
DocketC9-86-821
StatusPublished
Cited by7 cases

This text of 396 N.W.2d 635 (Satellite Industries, Inc. v. Keeling) is published on Counsel Stack Legal Research, covering Court of Appeals of Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Satellite Industries, Inc. v. Keeling, 396 N.W.2d 635, 1986 Minn. App. LEXIS 4988 (Mich. Ct. App. 1986).

Opinions

OPINION

LANSING, Judge.

This case involves the enforceability of an employee non-competition agreement and an agreement not to use or disclose confidential and proprietary information. Satellite sued its former employee, David Keeling, for breach of an employment agreement and sought a temporary injunction. Keeling moved for summary judgment holding the agreement unenforceable. At the motion hearing the trial court misconstrued Satellite’s request for temporary relief as a motion for summary judgment, apparently equated crossmotions for summary judgment to a waiver of trial, and decided the entire action, including damages, without a trial. Satellite appeals, requesting, among other relief, a trial on its breach of contract claim. We affirm the denial of a temporary injunction, reverse the remainder of the judgment, and remand.

FACTS

Satellite Industries, Inc., designs, builds, and sells portable restrooms and related products. Its principal product is a portable restroom known as the “Tuffway” unit. Satellite also rents and services temporary sanitation facilities around the upper Mid-west.

David C. Keeling began employment with Satellite as a sales representative on January 10, 1974. Keeling had been involved in sales for a number of years. His previous position was area sales manager for a cosmetic company.

Keeling was presented with the employment agreement at least a week after beginning his job. He read and signed it without discussion. The agreement included a non-competition agreement prohibiting Keeling from engaging in a competitive business in any state where Satellite does business either while employed by Satellite [638]*638or for two years after his termination. Another provision required Keeling not to disclose any of Satellite’s inventions, improvements, or discoveries. Satellite conducts business in all 50 states. All employees are required to sign this employment agreement.

After a few years as sales representative, Keeling was promoted to sales manager and eventually vice president of sales. His principal responsibility as vice president was supervisory, but he also maintained personal contact with a handful of Satellite’s larger accounts.

Keeling also had access to significant confidential information. He had lists of current and prospective customers as well as knowledge of the cost structure of Satellite products and components. He was informed of company decisions regarding product evolution, product development, and contemplated design changes. While vice president, he participated in formal product development sessions and worked with Satellite’s strategic plans for moving into new markets. During this time, Satellite developed a new hinge design for its “Tuffway” unit.

In the fall of 1984, Keeling met with C.W. Harbert, who owned a company in Texas that manufactured and rented portable restrooms. In May 1985 Keeling, Har-bert, and Carroll LaBorde, the operator of a restroom service company, decided to establish a business manufacturing a new type of portable restroom. Harbert and LaBorde became the sole shareholders and directors of the new business, Synergy III Industries, Inc. Keeling is its president. They planned to have a portable restroom on the market by November 1985 and projected that four thousand units would be sold in the first year. Keeling negotiated his new job while still employed at Satellite.

On June 11, 1985, Keeling resigned from his position with Satellite. At Satellite’s request, he remained on the payroll and was available for consultation through June 21, 1985. The next day, Keeling began work at Synergy III as its sole employee.

On July 5, 1985, Satellite sued Keeling for breach of the employment agreement. Keeling answered, admitted signing the employment agreement, admitted quitting his job to go into business with a venture competitive to Satellite, denied that the information he possessed was proprietary and confidential, and disputed the enforceability of the employment agreement.

On October 30, 1985, Satellite moved for a temporary injunction to prohibit Keeling from engaging in the competitive business and to prohibit him from disclosing any of Satellite’s trade secrets. Specifically, Satellite sought to protect any information regarding the new “Tuffway” hinge design. Keeling moved for summary judgment, claiming the agreement was unenforceable because it was unreasonable and not supported by independent consideration. In response to Keeling’s motion, Satellite stated that Satellite, not Keeling, was entitled to partial summary judgment on the employment agreement.

The trial court stated that the case was presented on “cross motions for summary judgment” and issued the following order:

1. That Plaintiff’s motion for full and complete enforcement of the restrictive covenant, a copy of which is attached to the Complaint as Exhibit “A”, is denied.
2. That the Court, finding the consideration provided to Defendant Keeling insufficient to support full enforcement, orders the subject restrictive covenant into effect as follows:
a. Defendant Keeling is enjoined and restrained from using any confidential business information or trade secrets actually obtained during the term of his employment at Satellite Industries for the production of income in his new venture Synergy III Industries, Inc. The Court makes a special finding that the Affidavit of P.R. Juaire dated November 22, 1985, does not amount to clear and convincing proof of the use of confidential business information or trade secrets of Plaintiff in the design and production [639]*639of Synergy Ill s quick assembly portable sanitation unit, a picture of which is attached to the Affidavit of P.R. Juaire as Exhibit “A.”
b. To protect Satellite Industries’ position in the market from an unfair competitive advantage by Defendant, Plaintiff is ordered to provide to the Court, solely for its in camera use, a list of customers to whom sales of the Satellite “Tuffway” portable sanitation unit were made during the period June 1st, 1984, through June 1st, 1985. Defendant Keeling, on behalf of Synergy III, is ordered to provide the Court, on or before June 30, 1986, a complete list of customers to whom sales have been made or with whom purchase agreements or invoices have been executed through the date June 21, 1986. This list will also be provided solely for the Court’s in camera use.
c. The Court will compare the lists and, with respect to any customer listed by both parties, Defendant shall pay to Plaintiff Satellite Industries an amount equal to 50% of the gross sales price of all portable sanitation units sold for the period June 21, 1985, through June 21, 1987.
d. Compliance with this order shall constitute full and complete performance by Defendant of his obligations under the subject restrictive covenant. LET JUDGMENT BE ENTERED ACCORDINGLY.

ISSUES

1. Did the trial court err in entering final judgment only partially enforcing the non-competition clause?

2. Did the trial court apply the correct standard in denying Satellite’s motion for temporary and permanent injunctive relief?

ANALYSIS

I

The issue of enforceability of the employment agreement was properly before the court for summary judgment. Neither party asserts remaining issues of material fact.

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Satellite Industries, Inc. v. Keeling
396 N.W.2d 635 (Court of Appeals of Minnesota, 1986)

Cite This Page — Counsel Stack

Bluebook (online)
396 N.W.2d 635, 1986 Minn. App. LEXIS 4988, Counsel Stack Legal Research, https://law.counselstack.com/opinion/satellite-industries-inc-v-keeling-minnctapp-1986.