Stay Alert Safety Servs. v. Pratt
This text of 2017 NCBC 99 (Stay Alert Safety Servs. v. Pratt) is published on Counsel Stack Legal Research, covering North Carolina Business Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.
Opinion
Stay Alert Safety Servs. v. Pratt, 2017 NCBC 99.
STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE SUPERIOR COURT DIVISION FORSYTH COUNTY 17 CVS 4732
STAY ALERT SAFETY SERVICES, INC.,
Plaintiff,
v. ORDER ON OPPOSITION TO DESIGNATION THOMAS SCOTT PRATT; and ROADSAFE TRAFFIC SYSTEMS, INC.,
Defendants.
1. THIS MATTER is before the Court on Plaintiff’s Opposition to
Designation as Mandatory Complex Business Case and Motion to Vacate Order of
Designation (“Opposition”). For the reasons stated below, the Court concludes that
the Opposition is meritorious, the case should proceed on the regular docket of the
Superior Court of Forsyth County, and the designation and assignment order should
be vacated.
Craige Jenkins Liipfert & Walker LLP, by Ellis B. Drew, III, for Plaintiff.
Ogletree, Deakins, Nash, Smoak & Stewart, P.C., by Jennifer R. Cotner and Phillip J. Strach, for Defendants.
Gale, Chief Judge.
2. Plaintiff Stay Alert Safety Services, Inc. (“Stay Alert”) initiated this
action against its former employee Thomas Scott Pratt (“Pratt”) and its competitor
Roadsafe Traffic Systems, Inc. (“Roadsafe”) on July 31, 2017. Stay Alert alleges that Pratt breached the non-competition and non-disclosure provisions of his employment
contract and seeks an injunction prohibiting Pratt from continuing his employment
with Roadsafe. Stay Alert further alleges that Roadsafe knew of, and tortiously
interfered with, Pratt’s employment agreement with Stay Alert and engaged in unfair
competition by using Stay Alert’s confidential information to gain a competitive
advantage.
3. On September 1, 2017, Defendants timely filed their Answer and Notice
of Designation, representing that the case should be designated as a mandatory
complex business case pursuant to N.C. Gen. Stat § 7A-45.4(a)(5) on the basis that
the action involves material issues related to “[d]isputes involving the ownership, use,
licensing, lease, installation, or performance of intellectual property,” and pursuant
to N.C. Gen. Stat. § 7A-45.4(a)(8) on the basis that the action involves a “[d]ispute[ ]
involving trade secrets.” N.C. Gen. Stat. § 7A-45.4(a)(5), -45.4(a)(8) (2015).
4. Based on Defendants’ representation, Chief Justice Mark Martin
designated the case as a mandatory complex business case on September 5, 2017. On
September 6, 2017, the undersigned assigned the case to the Honorable Michael L.
Robinson.
5. Stay Alert timely filed its Opposition on September 28, 2017, contending
that the allegations in this action do not fall within the provisions of N.C. Gen. Stat.
§§ 7A-45.4(a)(5) or 7A-45.4(a)(8). Stay Alert contends, rather, that its claims are
focused solely on the alleged breach of the restrictive covenants in Pratt’s
employment agreement without involving material issues regarding either intellectual property or trade secrets. Further, Stay Alert contends that the 2014
amendment of Section 7A-45.4 forecloses designation based on a dispute asserting
only a claim for common law unfair competition.
6. Defendants timely filed their Response to Stay Alert’s Opposition,
contending that the Complaint seeks “injunctive relief and recovery for damages
relating to Defendants’ alleged breach of restrictive covenants containing
non-compete and non-disclosure of [Stay Alert’s] alleged confidential/proprietary
information and trade secrets.” (Notice of Designation 3.) Defendants contend that
when the Court looks beyond the specified causes of action and examines the
underlying factual allegations on which the action is based, it is clear that this case
includes a dispute involving material issues related to intellectual property and trade
secrets. Defendants’ position rests on the definition of confidential information in the
restrictive covenants that Stay Alert is seeking to enforce. The restrictive covenant
defines confidential information to include:
information disclosed to or known by [the] [e]mployee as a consequence of or through his employment with the Company (including information conceived, originated, discovered or developed by [the] [e]mployee) not generally known about the Company’s business, products, services and operations, including without limitation any trade secrets, know how, inventions, discoveries and improvements and ideas, whether or not patentable.
(Compl. ¶ 11.) Defendants, therefore, argue that “[t]he enforceability of the
Employment Agreement[’]s [restrictive covenants] depend[s] largely on whether
Plaintiff has a trade secret in the confidential information of which it claims Pratt is in possession.” (Defs.’ Resp. Pl.’s Opp’n to Designation Mandatory Complex Business
Case 5.)
7. The Complaint uses the term “trade secrets” twice, but only when
quoting the restrictive covenants in Pratt’s employment agreement. (See Compl.
¶ 11.) The Complaint does not further allege actual misappropriation of Stay Alert’s
trade secrets pursuant to the North Carolina Trade Secrets Act, N.C. Gen. Stat.
§§ 66-152 to 157. Stay Alert asserts only claims for breach of contract, tortious
interference with contract, and unfair competition.
8. This Court has previously explained that “[p]rior to the Business Court
Modernization Act, N.C. Gen. Stat. § 7A-45.4(a)(4) allowed designation of a complex
business case on the basis that it included a material issue related to ‘state trademark
or unfair competition law,’” but that “[t]he Business Court Modernization Act deleted
express reference to unfair competition, and designation as a mandatory complex
business case under that particular subsection is now restricted to disputes involving
trademark law.” Cornerstone Health Care, P.A. v. Moore, 2015 NCBC LEXIS 65, at
*5 (N.C. Super. Ct. June 22, 2015). In particular, the Court stressed that it “has not
historically been assigned cases based on the assertion of more generalized
allegations of the employer’s loss of confidential or proprietary information.” Id. at
*6-7.
9. Defendants contend that this action is analogous to Union Corrugating
Company v. Viechnicki, where the plaintiff asserted only a contract claim but made
numerous factual allegations referring to and specifying what it contended to be its trade secrets. Union Corrugating Co. v. Viechnicki, No. 14 CVS 6240, Order on Opp’n.
Designation of Action as Mandatory Complex Business Case, at ¶ 3 (N.C. Super. Ct.
Sept. 9, 2014). There, Judge Jolly concluded that the underlying disputes involved
trade secrets and designation was proper even though no specific trade secret claim
had been alleged.
10. Unlike in Union Corrugating, the Complaint here has no factual
allegations to suggest that the dispute will require the Court to resolve material
issues involving trade secrets or intellectual property. The Court cannot support
designation based only on Defendants contention that “[t]he nature of the
‘confidential information’ and to the extent it can actually be protected by trade secret
law is directly related to whether Plaintiff will be able to demonstrate that it has a
legitimate business interest in enforcing this very broad non-compete clause.” (Defs.’
Resp. Pl.’s Opp’n Designation as Mandatory Complex Business Case 5.) Confidential
information need not necessarily be a trade secret to be protected. Further, Stay
Alert has indicated no intent to claim any trade secret misappropriation.
11.
Free access — add to your briefcase to read the full text and ask questions with AI
Related
Cite This Page — Counsel Stack
2017 NCBC 99, Counsel Stack Legal Research, https://law.counselstack.com/opinion/stay-alert-safety-servs-v-pratt-ncbizct-2017.