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LLC v. Land

United States District Court, N.D. Indiana, Fort Wayne Division

March 30, 2017

BIOMET 3i, LLC and ZIMMER US, INC., Plaintiffs,
v.
HEATHER LAND, Defendant.

          OPINION AND ORDER

          CHIEF JUDGE THERESA L. SPRINGMANN JUDGE

         This matter is before the Court on Defendant Heather Land's Objections to the Report and Recommendation of the United States Magistrate Judge [ECF No. 85]. The Plaintiffs, Biomet 3i, LLC (“Biomet 3i”) and Zimmer US, Inc. (“Zimmer”), filed a Motion for a Preliminary Injunction [ECF No. 8] and accompanying Brief in Support [ECF No. 9] on April 12, 2016. The Plaintiffs are requesting injunctive relief to enforce a restrictive covenant (the “Covenant”) of their Non-Solicitation Agreement for Sales Managers and Representatives (the “Agreement”) against the Defendant, who currently is employed by their competitor, Keystone Dental (“Keystone”). The Court referred this matter to Magistrate Judge Susan Collins on May 10, 2016. The Defendant filed her Response [ECF No. 47] on July 7, 2016. The Magistrate Judge held an Evidentiary Hearing on July 11, and July 12, 2016. The Plaintiffs filed their Post-Hearing Brief in Support [ECF No. 58] on September 8, 2016, to which the Defendant filed her Response [ECF No. 62] on September 9, 2016. The Plaintiffs filed their Post-Hearing Reply [ECF No. 65] and the Defendant filed a Post-Hearing Brief Response [ECF No. 66] on September 15, 2016. The Magistrate Judge issued the Report and Recommendation (“R&R”) on January 10, 2017. The Defendant filed her Objections to the Report and Recommendation [ECF No. 88] on January 24, 2017, to which the Plaintiffs filed their Brief in Opposition [ECF No. 97] on February 9, 2017. This matter is now ripe for ruling.

         STANDARD OF REVIEW

         In accordance with the Federal Magistrate's Act, as amended, 28 U.S.C. § 636(b), Federal Rule of Civil Procedure 72(b), and Local Rule 72-1, a judge may designate a magistrate judge to hear and determine any pretrial matter pending before the court, including dispositive motions, and the magistrate judge must enter a recommended disposition, including any proposed findings of fact. The parties then have fourteen days after being served with a copy of the recommended disposition to file written objections to the proposed findings and recommendation. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b)(2). “The district judge must determine de novo any part of the magistrate judge's disposition that has been properly objected to.” Fed.R.Civ.P. 72(b)(3); see also 28 U.S.C. § 636(b)(1); Harlyn Sales Corp. Profit Sharing Plan v. Kemper Fin. Servs., 9 F.3d 1263, 1266 (7th Cir. 1993). The district judge must look at all the evidence contained in the record and may accept, reject, or modify the recommended disposition. Fed.R.Civ.P. 72(b)(3); Harlyn, 9 F.3d at 1266.

         DISCUSSION[1]

         The Defendant objects to the R&R on several grounds. First, the Defendant argues that the Magistrate Judge in the R&R applied an incorrect standard. The Defendant contends that under the correct standard, the Plaintiffs are not likely to succeed on the merits because protection of the Plaintiffs' legitimate interest does not require injunctive relief. Furthering that point, the Defendant secondly argues that the Plaintiffs already have an adequate remedy at law that does not require injunctive relief. Third, the Defendant argues that the Plaintiffs do not suffer from irreparable harm. Fourth, the Defendant argues that the balance of harms weighs against injunctive relief. Fifth the Defendant argues that the public interest is not served by issuing an injunction. Sixth, the Defendant argues that the Plaintiffs should be estopped from enforcing the Covenant because such injunction would be inequitable. Seventh and last, the Defendant argues that any preliminary injunction should be more limited than that recommended by the Plaintiffs. The Court addresses each objection in turn.

         A. Proper Standard

         The Defendant argues that the Magistrate Judge applied the incorrect standard for a preliminary injunction, and under the correct standard, the Plaintiffs are not likely to succeed on the merits because protection of the Plaintiffs' “legitimate interest” does not require injunctive relief. The Defendant argues that the Magistrate Judge erred in applying “a standard akin” to a Rule 12(b)(6) motion by assuming that the Defendant only sought a facial challenge to the enforceability of the Covenant. The Defendant contends that the R&R does not evaluate the Covenant's application to the evidentiary facts. The Plaintiffs point out that the Defendant does not support this contention with any legal authority and does not proffer an alternative standard than the one the Magistrate Judge used. Furthermore, the Plaintiffs argue that the Magistrate Judge applied the proper standard in the case.

         The Magistrate Judge set forth the proper standard in the R&R:

“A preliminary injunction is an extraordinary remedy never awarded as of right.” Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 24 (2008) (internal citations omitted). “In assessing whether a preliminary injunction is warranted, we must consider whether the party seeking the injunction has demonstrated that ‘1) it has a reasonable likelihood of success on the merits; 2) no adequate remedy at law exists; 3) it will suffer irreparable harm if it is denied; 4) the irreparable harm the party will suffer without injunctive relief is greater than the harm the opposing party will suffer if the preliminary injunction is granted; and 5) the preliminary injunction will not harm the public interest.'” St. John's United Church of Christ v. City of Chi., 502 F.3d 616, 625 (7th Cir. 2007) (quoting Linnemeir v. Bd. of Trs. of Purdue Univ., 260 F.3d 757, 761 (7th Cir. 2001)). The district court must exercise its discretion to arrive at a decision “based on a subjective evaluation of the import of the various factors and a personal, intuitive sense about the nature of the case.” Lawson Prods., Inc. v. Avnet, Inc., 782 F.2d 1429, 1436 (7th Cir. 1986). The decision-making process also involves a “sliding scale” analysis, at least to the extent that “the more likely it is the plaintiff will succeed on the merits, the less the balance of irreparable harms need weigh toward its side; the less likely it is the plaintiff will succeed, the more the balance need weigh towards its side.” Abbott Labs. v. Mead Johnson & Co., 971 F.2d 6, 12 (7th Cir. 1992) (citations omitted). “The sliding scale approach is not mathematical in nature, rather ‘it is more properly characterized as subjective and intuitive, one which permits district courts to weigh the competing considerations and mold appropriate relief.'” Ty, Inc. v. Jones Grp., Inc., 237 F.3d 891, 895-96 (7th Cir. 2001) (quoting Abbott Labs., 971 F.2d at 12). But there is still a threshold to be met. A total failure to meet any one of the test's requirements cannot be compensated by a strong showing with respect to another. See, e.g., East St. Louis Laborers' Local 100 v. Bellon Wrecking & Salvage Co., 414 F.3d 700, 703 (7th Cir. 2005) (holding that, if a moving party cannot show that there is irreparable harm and no adequate remedy at law, “a court's inquiry is over and the injunction must be denied”); Jolivette v. Husted, 694 F.3d 760, 765 (6th Cir. 2012) (“Although no one factor is controlling, a finding that there is simply no likelihood of success on the merits is usually fatal.”).

(R&R 10-11; ECF No. 88.) Accordingly, upon review of the record, the Court agrees with the Magistrate Judge and adopts as its own the findings of fact and analysis of the Magistrate Judge in applying the standard of review for the preliminary injunction.

         B. Existence of a Protectible Interest

         The Defendant objects to the Magistrate Judge's finding in the R&R that the Plaintiffs have a legitimate protectible interest. The Defendant argues that the Plaintiffs have not proven that a portion of the files the Defendant uploaded on to the USB drive contains confidential information as alleged, or that the Defendant does not have influence over customers that she once had. The Defendant argues that absent the Plaintiffs establishing either, the Plaintiffs have not established a legitimate protectible interest, but rather only a “theoretical” one.[2] The Plaintiffs argue that they have established a protectible interest, and have established both that the Defendant took confidential information and that the Defendant threatens their customer relationships.

         The Magistrate Judge found that the Plaintiffs have established a legitimate protectible interest to enforce an injunction against the Defendant. The Plaintiffs must show “some reason why it would be unfair to allow the employee to compete with the former employer.” Unger v. FFW Corp., 771 N.E.2d 1240, 1244 (Ind. App. 2002) (citing Titus v. Rheitone, Inc., 758 N.E.2d 85, 92 (Ind.Ct.App. 2001)). The Agreement is designed to prevent an employee from using his or her knowledge of the Plaintiffs' confidential information to solicit business from the Plaintiffs' customers or active prospects in competition with the Plaintiffs. To allow an employee to leave employment with the Plaintiffs and then do those things immediately as an employee of a competitor would be unfair to the Plaintiffs. Upon review of the record, the Plaintiffs have established a legitimate protectible interest on these grounds.

         As the Magistrate Judge discussed, the Defendant's argument for whether the Plaintiffs took proper steps to establish that the alleged confidential documents she took were indeed “confidential” for the purposes of establishing a legitimate protectible interest is irrelevant because the Plaintiffs have already established a legitimate protectible interest under Indiana law-to prevent the Defendant from stealing clients or lending an unfair competitive advantage. Zimmer US, Inc. v. Keefer, No. 3:12-CV-395-JD-CAN, 2012 WL 5268550, at *8 (N.D. Ind. Oct. 23, 2012) (citing Hahn v. Drees, Perugini & Co., 581 N.E.2d 457, 460 (Ind.Ct.App. 1991)). Accordingly, upon review of the record, the Court agrees with the Magistrate Judge and adopts as its own the findings of fact and analysis of the Magistrate Judge in finding that the Plaintiffs have established a legitimate protectible interest for injunctive relief under Indiana law.

         C. Temporal Scope

         The Defendant next objects to the temporal scope of the injunction. The Defendant argues that in holding that an 18-month length of the restriction is reasonably likely to succeed on the merits, the Magistrate Judge did not test its reasonableness against the facts adduced at the hearing.

         Indiana courts have upheld time restrictions equal to and longer than the 18-month restriction contained in the Agreement. See Standard Register Co. v. Cleaver, 30 F.Supp.2d 1084, 1098 (N.D. Ind. 1998); Coffman v. Olson & Co., 906 N.E.2d 201, 208 (Ind.Ct.App. 2009); Gleason v. Preferred Sourcing, LLC, 883 N.E.2d 164, 174 (Ind.Ct.App. 2008). “The fact that the [a]greement contains a provision tolling this period during any violation by [the Defendant] does not change this result . . . .” Gleeson, 883 N.E.2d at 174 (citing Century Pers., Inc. v. Brummett, 499 N.E.2d 1160, 1162 (Ind.Ct.App. 1986)). The Defendant argues that the R&R did not provide an in-depth as applied factual analysis as to why the temporal scope of the injunction is reasonable. However, the Defendant does not proffer an argument for why this duration would be unreasonable given the facts set forth in the R&R. Instead, the Defendant in a footnote provides several citations to the transcript, her Post-Hearing Brief, and her Brief in Response arguing that the Defendant had “no influence over Plaintiffs' customers, ” and “does not possess the customer relationships asserted by the Plaintiff.” (Def's Resp. to Pls.' Post Hearing Br. 9, ECF No. 66.) That the Defendant was unsuccessful in recruiting clients away from the Plaintiffs is unavailing. The findings of fact in the R&R demonstrate that the Plaintiffs have a legitimate protectible interest in enforcing the restrictive period in the Agreement the Defendant entered into, a time period that is well settled under Indiana law to be reasonable. The Court finds on review of the R&R that the temporal scope of the restriction is reasonable given the record set forth in the R&R and the contractual term.

         D. Breadth of ...


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