West Plains, L.L.C. v. Retzlaff Grain Co.

927 F. Supp. 2d 776, 2013 WL 705859, 2013 U.S. Dist. LEXIS 25945
CourtDistrict Court, D. Nebraska
DecidedFebruary 26, 2013
DocketNo. 8:13CV47
StatusPublished
Cited by5 cases

This text of 927 F. Supp. 2d 776 (West Plains, L.L.C. v. Retzlaff Grain Co.) is published on Counsel Stack Legal Research, covering District Court, D. Nebraska primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
West Plains, L.L.C. v. Retzlaff Grain Co., 927 F. Supp. 2d 776, 2013 WL 705859, 2013 U.S. Dist. LEXIS 25945 (D. Neb. 2013).

Opinion

MEMORANDUM AND ORDER

SMITH CAMP, Chief Judge.

This matter is before the Court on the Plaintiffs Motion for Preliminary Injunction (Filing No. 5). Having considered the parties’ briefs, evidence, and arguments heard on February 20, 2013, the Court will grant the Plaintiffs Motion, in part.

PROCEDURAL HISTORY

Plaintiff West Plains, L.L.C. d/b/a CT Freight Company (“CT Freight”) asserts seven causes of action: (1) misappropriation of trade secrets in violation of Neb. Rev.Stat. § 87-504 against former employees of CT Freight; (2) misappropriation of trade secrets in violation of Neb.Rev.Stat. § 87-504 against Defendants Retzlaff Grain Company, Inc., and Bryce Wells; (3) tortious interference with business relationships against all Defendants; (4) tortious interference with employment relationships against Defendants Retzlaff Grain Company, Inc., and Bryce Wells; (5) breach of the duty of loyalty against former employees of CT Freight; (6) conspiracy against all Defendants; and (7) violation of the computer fraud and abuse act, 18 U.S.C. § 1030, against Defendant Chad Needham. CT Freight generally seeks to enjoin the Defendants from soliciting its clients or using its confidential information and trade secrets during the pendency of this action, and requests that the Defendants be required to return to CT Freight any documentation that contains its confidential information. At the hearing held on February 20, 2013, counsel for CT Freight acknowledged that the basis for its Motion for Preliminary Injunction is its claims for misappropriation of trade secrets and breach of duty of loyalty.

CT Freight filed its Complaint (Filing No. 1) on February 8, 2013, and its Motion for Temporary Restraining Order (“TRO”) and Preliminary Injunction (Filing No. 5) on February 11, 2013. The Court held a hearing on CT Freight’s Motion for TRO that day, and entered a TRO (Filing No. 17) on February 12, 2013. The TRO expires, at the latest, on February 26, 2013, at 3:20 p.m. (Id.)

FACTUAL BACKGROUND

I. The Freight Brokerage Industry

Both CT Freight and Retzlaff Grain Company Incorporated d/b/a RFG Logistics (“RFG Logistics”) are in the business of freight brokerage. (Filing No. 9-1 ¶ 3; Filing No. 40-2.) Freight brokerages match customer loads for shipment with available trucks and drivers. (Filing No. 40-1, Affidavit of Michael T. Fouts, ¶ 7.) Individual freight brokers arrange transportation of a customer’s freight with a shipper or carrier. (Id. ¶¶ 12, 13.) Brokers generate revenue by arranging transport at a price that is lower than the price a customer is willing to pay, and collecting the difference as the broker’s fee. (Id. ¶ 12.) Customers of freight brokerages include companies of all sizes, and in many cases, customers use multiple freight brokerages to arrange and satisfy their shipping needs. (Id.) Evidence has been presented that there are approximately 12,000 freight brokers in the United States, and approximately 50,000 motor carriers. (Id. ¶¶ 7, 9).

The parties disagree about the relative availability of carrier and customer information in the brokerage business. CT Freight has submitted evidence that its business as a freight logistics brokerage depends on special relationships main[780]*780tained by its brokers with CT Freight’s customers and contract carriers, and CT Freight’s special knowledge about such customers and carriers. (Filing No. 9-1 ¶ 4.) By maintaining close relationships with customers and contract carriers, CT Freight brokers can quickly and economically source customer load requests and arrange for return loads for the contract carriers. (Id. ¶ 6.) These relationships depend on the use of information such as customer needs1; pricing processes and rates; driver databases and/or spreadsheets and information contained therein or derived therefrom; proposals made or planned by CT Freight for such customers; and technical analyses or other data provided by CT Freight for use by CT Freight’s brokers in servicing customers and contract carriers (this information referred to collectively herein as the “Confidential Information”). (Id. ¶¶ 14, 32; see also Filing No. 5 at 2.) CT Freight has submitted evidence that it required its employees to adhere to a confidential information policy, and its employees agreed through the employee handbook to refrain from working for competitors while employed with CT Freight. (Filing No. 9-1 ¶ 15; Filing No. 9-7.)

Defendants presented evidence suggesting that the names and contact information for companies in the business of shipping freight — and those carriers that can ship freight — is available in the public domain. For example, Defendants stated that such information can be obtained from Google, phone books, and multiple websites. (See Filing No. 40-1, Affidavit of Michael Fouts, ¶¶ 9-11; Filing No. 40-3, Affidavit of Chad Needham, ¶¶ 8-11, and Filing Nos. 40-4, 40-6, 40-7, 40-8, 40-9, 40-10, and 40-11; Filing No. 40-14, Affidavit of Cindy Scholting, ¶ 21; Filing No. 40-15, Affidavit of Drew Waggoner, ¶ 31; Filing No. 40-16, Affidavit of Todd Payzant, ¶ 30; Filing No. 40-18, Affidavit of Crystal Konecky, ¶ 22; Filing No. 40-20, Affidavit of Samantha Rhone, ¶ 26; Filing No. 40-17, Affidavit of Jeffrey Bradley, ¶ 23; Filing No. 40-13, Affidavit of Thomas Danner, ¶ 24; Filing No. 40-21, Affidavit of Rebecca Danner, ¶ 15). Defendants also stated that data on shipping rates in specific lanes (origin to destination) are available by monthly subscription to such public sites as Truckload rate.com, Transcore (DAT), Transcore.DAT.com, Freight-quote.com, and www.rateindex.transcore. com. (Filing No. 40-1 ¶¶ 10, 15.) The data available to all subscribers include prices paid by shippers and prices paid to carriers, as well as the availability of trucks anywhere in the United States. (Filing No. 40-1 ¶ 10.)

II. Asset Purchase and Operations Under West Plains, LLC

Plaintiff purchased the assets of West Plains CO (“WPCO”) on or about February 25, 2012. (Filing No. 40-2, Affidavit of Bryce Wells, ¶ 4.) Defendant Bryce Wells owned WPCO at the time of the asset purchase. (Filing No. 9-1 ¶ 5.) After the purchase, the Plaintiff obtained all the assets, intellectual property, and records of WCPO (id. ¶ 5; see also Filing No. 40-2 at 10) and operated its freight logistics and brokerage services division using the CT Freight trade name. (Id.) CT Freight also hired many of WPCO’s former employees, including Defendants Jeffrey Bradley, Thomas Danner, Rebecca Danner, Jody May, Chad Needham, Todd Payzant, Crystal Konecky, Samantha Rhone, Cindy Scholting and Drew Waggoner (the “Indi[781]*781vidual Defendants”). (Id. ¶¶ 7, 8.) The Individual Defendants composed the vast majority of CT Freight’s brokers and support staff. (Id. ¶ 8.) The Individual Defendants also brought in almost all of CT Freight’s customer . freight broker business, and all of CT Freight’s non-livestock broker business. (Id. ¶¶ 8, 10, 13.) CT Freight brokers and support staff secure and manage business in large part through access to CT Freight’s electronic data and other sources included within the Confidential Information described above. (Id.

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Bluebook (online)
927 F. Supp. 2d 776, 2013 WL 705859, 2013 U.S. Dist. LEXIS 25945, Counsel Stack Legal Research, https://law.counselstack.com/opinion/west-plains-llc-v-retzlaff-grain-co-ned-2013.