United States District Court, S.D. Indiana, Indianapolis Division
ORDER ON PLAINTIFF’S MOTION FOR PRELIMINARY
EVANS BARKER, JUDGE
cause is before the Court on Plaintiff Badger Daylighting
Corporation’s (“Badger”) Motion for
Preliminary Injunction [Dkt. 22] filed on June 3, 2019. With
that motion, Badger seeks an order enjoining Defendant Gary
Palmer from using Badger’s confidential information and
trade secrets; soliciting Badger’s customers and
employees; continuing his employment with SEC and HydroX;
destroying, altering, removing, modifying, deleting, or
disposing of any documents; and otherwise unfairly competing
with Badger [Dkt. 22, Dkt. 68]. This matter came before the
Court for oral argument on September 6, 2019.
reasons detailed in this entry, Plaintiff’s motion is
GRANTED in part and DENIED in part.
is a Canadian corporation with its principal place of
business in Alberta, Canada [Dkt. 1-2, at 2; Dkt. 63, at 1].
Badger purports to be the industry leader in nondestructive
hydro-excavation (“hydrovac”) services [Dkt 1-2,
at 1]. Its workforce numbers approximately 2300 employees and
it conducts operations in 42 states and Canada [Dkt 1-2, at
1; Dkt 63, at 1]. Mr. Palmer is a United States citizen
residing in Henry County, Georgia [Id.]. Mr. Palmer
was employed with Badger for nearly seven years from July 26,
2012 through April 8, 2019 [Dkt. 63, at 1-2; Dkt. 68, at 3-4,
8]. He served as a Regional Manager from December 20, 2013
until his resignation, when he began employment with
Southeast Connections, LLC (“SEC”) as President
of SEC’s hydrovac services business line
subsidiary of PowerTeams Services (“PowerTeams”),
is a general contractor that performs utility infrastructure
services, including hydrovac services, in many of the same
locations as Badger [Dkt. 63, 2-3; at Dkt. 68, at 9]. Shortly
after Mr. Palmer began his employment with SEC, SEC spun off
its hydrovac business line into a new entity, Hydro
Excavators, LLC (“HydroX”), which Mr. Palmer now
oversees [Id.]. Neither SEC nor any of its related
entities is a party to this litigation.
Mr. Palmer’s Employment with Badger
Palmer was first hired by Badger as a Field Supervisor in
July 2012 [Dkt. 68, at 3]. Prior to this employment, he had
never heard of hydrovacing [Id.]. Mr. Palmer quickly
rose up the ranks at Badger, receiving three promotions in
less than a year and a half [Id. at 3-4; Dkt. 63, at
1]. On December 20, 2013, Mr. Palmer was promoted to Regional
Manager for the Southeast Region, whose duties included:
managing and growing significant customer accounts;
identifying opportunities for his sales team; maximizing his
team’s performance on sales targets; teaching Area
Managers how to identify opportunities and grow the business;
developing and executing sales strategies; and forecasting,
managing, and reporting sales activity [[Dkt. 68, at 4-5]. He
also had management and recruitment responsibilities
[Id.]. In his roles at Badger, particularly as
Regional Manager, Mr. Palmer had extensive access to
Badger’s confidential business data and information,
which generally was provided to employees only on a
need-to-know basis [Id. at 6].
promotion to the Regional Manager position, Mr. Palmer signed
the non-compete, non-solicitation, and confidentiality
agreement currently in dispute before the Court (the
“Agreement”) [Id. at 5; Dkt. 63, at 4].
The confidentiality provision of the Agreement prohibits the
disclosure and use of confidential information and defines
“confidential information” as:
Information which has been created, discovered, developed by
or otherwise become known to [Badger] . . . which information
has commercial value to [Badger], including but not limited
to trade secrets, innovations, equipment designs, processes,
computer codes, data, know how, improvements, discoveries,
development, techniques, marketing plans, strategies, costs,
customers, and client lists, or any information the Employee
has reason to know [Badger] would like to treat as
confidential for any purpose, such as maintaining a
competitive advantage or avoiding undesired publicity,
whether or not developed by the Employee.
confidentiality provision further provides:
Unless previously authorized . . . [u]pon termination of
employment, the Employee shall return to [Badger] any and all
property and records of [Badger] in his possession, at
[Badger], at his personal residence or elsewhere . . .
non-compete and non-solicitation provisions of the Agreement
prohibit Mr. Palmer from:
(a) Solicit[ing], accept[ing] or divert[ing] business from
any customer of [Badger] or attempt[ing] to convert any such
customer to acquire services from another person or entity
which are similar to the services provided by [Badger] . . .
the term “customer” shall mean any person or
entity to whom [Badger] has provided services during the
preceding twelve months to the start of the Period, or any
such persons or entities known by Employee to have been
targeted or contacted by [Badger] for sale of such services
during such twelve months;
(b) Within . . . Georgia, Florida, Tennessee, North Carolina,
South Carolina, Alabama, Virginia, Mississippi, compete in
any manner with [Badger], or own, manage, operate, control,
be employed by, participate in, or be connected in any manner
with the ownership, management, operation or control of any
business which competes directly or indirectly with [Badger];
(c) Solicit[ing] for employment any employee, consultant,
contractor or sub-contractor of [Badger].
[Dkt. 57-1, Exh. 18].
Mr. Palmer’s Departure from Badger and Employment with
approximately February or March of 2019, Mr. Palmer spoke
with a former Badger employee and current SEC employee about
opportunities at SEC [Id. at 8]. Mr. Palmer was
directed to Billy Campbell, SEC’s co-founder and former
president. Mr. Campbell informed Mr. Palmer that SEC was
spinning off its hydrovac business into a new entity, HydroX,
and that he was looking for someone with experience to run
this business line [Id.]. SEC extended an offer to
Mr. Palmer on March 1, 2019, which Mr. Palmer accepted on
April 1, 2019 [Id.; Dkt. 63, at 2]. The same day he
accepted employment with SEC, Mr. Palmer informed his direct
supervisor at Badger that he was resigning but would not
state where he was going to work [Dkt. 68, at 7]. Mr. Palmer
was reminded of his obligations pursuant to the Agreement
Badger’s Asserted Grounds for Relief
request for injunctive relief addresses five legal claims:
breach of the Agreement’s confidentiality provision;
breach of a fiduciary duty; violation of the Indiana Uniform
Trade Secrets Act (“IUTSA”); breach of the
agreement’s non-solicitation provision; and breach of
the Agreement’s non-compete provision [See
generally Dkt. 68]. The parties have provided additional
facts specific to each claim.
Breach of the Agreement’s Confidentiality Provision
& Violation of the IUTSA
Badger’s breach of contract claim pursuant to the
confidentiality provision and its IUTSA claim arise from Mr.
Palmer’s alleged absconding with over 5000 Badger
documents on the eve of his resignation [Dkt. 68, at 13].
Specifically, the day before announcing his resignation from
Badger, March 31, 2019, at approximately 5:00 a.m., Mr.
Palmer downloaded more than 5000 documents from his Badger
computer onto a Seagate large capacity external hard drive
[Id. at 13-14]. The downloaded documents included:
budgets; emergency response plans; employee contact
information; customer contact information; contract pricing
and bid information for specific customers; strategic plans;
organizational charts; job descriptions; regional
compensation planning information; financial reports and
statements; employee training materials; business development
planning materials and goals; master servant agreements and
compiled lists of master servant agreements; equipment
drawings; and employee salary information [Id. at
14; Dkt. 59-3, Exh. 103].
Palmer retained possession of the hard drive onto which he
had downloaded the Badger documents and did not disclose its
existence, despite specific discovery-based interrogatories
aimed at eliciting such information [Dkt. 68, at 14]. After
conducting its own forensic investigation of Mr.
Palmer’s assigned Badger computer, Badger discovered
all that Mr. Palmer had taken from its files without
permission [Id]. On June 20, 2019 Badger promptly
informed opposing counsel of Mr. Palmer’s unauthorized
heist and the existence of the hard drive [Id.].
During the Court hearing, counsel for Mr. Palmer attempted to
explain Mr. Palmer’s prior failure to reveal the
existence of the hard drive as having merely “slipped
his mind.” Our assessment of those circumstances is not
Palmer’s own expert confirmed the following detailed
information about Mr. Palmer’s use of the hard drive:
Mr. Palmer had attached the hard drive to his personal
computer and accessed the documents following his departure
from Badger. He took these steps as recently as June 20,
2019, the date when his counsel was informed by Badger of the
hard drive’s existence [Id.; Dkt. 59-3, Exh.
104] Mr. Palmer’s expert also confirmed that two
documents were located on both the hard drive and Mr.
Palmer’s SEC/HydroX computer, including a file entitled
“2018 Emergency Response File/Emergency response
plan” (the “Emergency Response Plan”)
Emergency Response Plan had been developed by a Badger
committee, which had included Mr. Palmer, to help its
customers respond to natural disasters. The file was
discovered attached to a May 22, 2019 e-mail sent by Mr.
Palmer from his HydroX e-mail address to his Hydro-X
executive assistant [Id. at 14], whom Mr. Palmer
directed to review the document “to ensure the B word
isn’t utilized” [Id. at 14]. Mr. Palmer
then sent an email to Mr. Campbell with an attachment
entitled “Hydro X Emergency Response Plan”
[Id. at 14-15]. The HydroX Emergency Response Plan
was virtually identical to the Badger Emergency Response
Plan, except for the removal of the Badger name [Id.
at 15]. Again, during the Court’s hearing on the
pending motions, counsel for Mr. Palmer stated that the
document has now been completely “pulled back”
and is not being used at or by HydroX.
these discoveries, Mr. Palmer turned over the hard drive as
well as his personal computer to Badger for inspection [Dkt.
64, at 22]. However, per his deposition testimony, Mr. Palmer
has represented that he cannot recall what action he took
with the hard drive between the time he originally created it
and the time Badger notified defense counsel of its
existence, nor can he recall whether he ever connected the
hard drive to any other device, including any device at
SEC/HydroX [Dkt. 59-3, Exh. 105]. He also cannot state with
certainty whether he sent the Badger documents to anyone in
particular or saved them in another location [Id.].
Breach of the ...