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Genesys Telecommunications Laboratories, Inc. v. Morales

United States District Court, S.D. Indiana, Indianapolis Division

December 6, 2019

GENESYS TELECOMMUNICATIONS LABORATORIES, INC., Plaintiff,
v.
DANIELLE MORALES, MICHAEL STRAHAN, MARK HERTEL, TALKDESK, INC., and RALPH MANNO, Defendants.

          ENTRY ON PLAINTIFF'S AMENDED MOTION FOR PRELIMINARY INJUNCTION

          TANYA WALTON PRATT, JUDGE

         This matter is before the Court on an Amended Motion for Preliminary Injunction filed pursuant to Federal Rule of Civil Procedure 65 by Plaintiff Genesys Telecommunications Laboratories, Inc. (“Genesys”) (Filing No. 164). After individual Defendants Danielle Morales (“Morales”), Michael Strahan (“Strahan”), Mark Hertel (“Hertel”), and Ralph Manno (“Manno”) left their employment with Genesys to join competitor Defendant Talkdesk Inc. (“Talkdesk”), Genesys initiated this lawsuit against the Defendants for misappropriation of trade secrets, breach of contract, and tortious interference with contract among other claims. Genesys seeks injunctive relief and damages against the Defendants. Genesys seeks a preliminary injunction to prohibit the Defendants from misappropriating its trade secrets, to prohibit the interference of contracts with employees, to prohibit the solicitation of employees, to prohibit the solicitation of customers, and to order the inventory and return of all Genesys property. For the following reasons, the Court denies the Amended Motion for Preliminary Injunction.

         I. BACKGROUND

         Plaintiff Genesys is a California corporation with a significant presence in Indiana. It is the successor to a former Indiana company, Interactive Intelligence. Genesys conducts substantial business in the state of Indiana and has corporate offices in Indianapolis; however, it also conducts substantial business in California, and its corporate headquarters is in California (Exhibit 234). Genesys has been a longstanding and market-leading provider of cloud and on-premises customer experience and contact center solutions. Defendant Talkdesk is a Delaware corporation with its headquarters in California. Talkdesk is an upstart company in the cloud-based call center software business. Talkdesk is a direct competitor of Genesys, and it does business across the United States, including in Indiana, and employs personnel in Indiana.

         The call center software industry is highly competitive. Avaya, Genesys, Talkdesk, Five9, LiveAgent, NICE-inContact, Serenova, 8x8, RingCentral, and Zendesk are some of the competitors in the Call Center as a Service market (Filing No. 183-6 at 4; Filing No. 187-1).

         Defendant Manno was initially hired by Interactive Intelligence, now part of Genesys, as a Director of Channel Sales in August 2004 (Exhibit 102). Manno was most recently a Vice President of Sales at Genesys. In that executive position, Manno oversaw all sales activities in Genesys' mid-market segment and managed a team of Area Directors and those Directors' Account Executives. At the end of September 2018, Manno ended his executive employment with Genesys. He is now employed as a Vice President of Sales with Talkdesk. He began his employment with Talkdesk on October 1, 2018 (Filing No. 188-2 at 5-7, 34).

         Defendant Hertel was initially hired by Interactive Intelligence, now part of Genesys, as West Area Director in December 2013 (Exhibit 103). Hertel was most recently an Area Director of Sales at Genesys. In that position, Hertel oversaw all sales activities in Genesys' West Region and managed a team of Account Executives. On September 28, 2018, Hertel's employment with Genesys ended. He is now employed as a Vice President of Sales with Talkdesk. He began his employment with Talkdesk on October 1, 2018 (Filing No. 188-1 at 8, 10).

         Defendant Strahan was initially hired by Interactive Intelligence, now part of Genesys, as a Test Engineer in September 2000 (Exhibit 101). Strahan was most recently an Area Director of Sales at Genesys. In that position, Strahan oversaw all sales activities in Genesys' Central Region and managed a team of Account Executives. Strahan's employment with Genesys ended on September 30, 2018. He is now employed as a Vice President of Sales with Talkdesk. He began his employment with Talkdesk on October 1, 2018 (Filing No. 188-5 at 9, 12, 18-19, 38).

         Defendant Morales was employed by Genesys as an Account Executive beginning in April 2017. In that position, Morales was responsible for making sales to Genesys' customers and potential customers and managing customer accounts and relationships. Morales resigned her employment with Genesys effective September 28, 2018, and joined Talkdesk as an Enterprise Account Executive on October 1, 2018. Morales is no longer employed by Talkdesk (Filing No. 188-3 at 7, 9; Filing No. 188-2 at 56; Filing No. 183-7 at 4, 10).

         In September 2018, before leaving Genesys to join Talkdesk, Morales downloaded Genesys documents and files onto a flash drive. The flash drive was then connected to one or more computers on at least eight occasions up through February 2019. Files that were found on the flash drive were also found on Morales' Talkdesk computer. Morales moved the Genesys files to her private Google drive. She also forwarded to her personal email account email messages that contained information about a Genesys customer and the challenges it was facing with a Genesys product. Morales took these documents, files, and information to retain what she thought would be helpful to her Genesys colleagues for closing any final deals that were in her pipeline after she left employment with Genesys (Filing No. 188-3 at 19; Filing No. 183-7 at 8-10; Exhibits 125, 126, 161, 164).

         Manno, Hertel, and Strahan were highly-compensated, trusted executives of Genesys and were entrusted by Genesys with substantial trade secrets to perform their duties. Manno, Hertel, Strahan, and Morales each entered into employment contracts that prohibited them from soliciting Genesys' employees for a period of time after leaving employment with Genesys and soliciting Genesys' customers for a period of time after leaving employment with Genesys (Exhibits 101, 102, 103, 105).

         In or around August 2018, Talkdesk CEO Tiago Paiva (“Paiva”) personally recruited Strahan, Hertel, and Manno during a conference call. Paiva encouraged these Genesys executives to come to Talkdesk and build up Talkdesk's sales organization contrary to their contractual obligations to Genesys. Hertel and Strahan had between six and ten conversations around this time, and the two influenced each other to leave Genesys for Talkdesk. Manno and Hertel had between ten and fifteen discussions, during which Manno influenced Hertel to leave Genesys and build Talkdesk's sales organization. Manno also informed Hertel that he was recruiting others, including Strahan (Filing No. 188-2 at 75-80; Filing No. 188-1 at 24, 30-34).

         While still employed by Genesys but having committed to joining Talkdesk, Manno, Hertel, and Strahan recruited other Genesys personnel, including Morales, on behalf of and for the benefit of Talkdesk. Talkdesk's employment offer process involving Genesys' employees required approval from Manno at the time that Manno was still employed by Genesys. Manno, Hertel, and Strahan continued their efforts after joining Talkdesk, seeking to recruit Genesys' best employees. They successfully recruited approximately fourteen Genesys' employees to join Talkdesk, knowing those employees' compensation and level of job satisfaction among other things (Filing No. 188-1 at 11, 17-18; Filing No. 188-5 at 53-55; Exhibits 114, 115, 117, 120, 129).

         Between September 17 and September 30, 2018, while still employed by Genesys, Strahan continued to email customers on behalf of Genesys from his Genesys email account. However, unbeknownst to Genesys, during this same period of time, Strahan also completed training for Talkdesk, attended a sales conference on behalf of and paid for by Talkdesk, listened in on at least four live Talkdesk sales calls, listened to two other recorded sales calls, and took a trip to New Jersey on behalf of Talkdesk. Strahan was paid by Genesys up through his last day of work with Genesys, which was September 30, 2018 (Filing No. 188-5 at 9-11, 14-20). As he was moving over to Talkdesk, Strahan advised Paiva about the areas of weakness of Genesys' products in an effort to take a Bank of Hawaii (“BOH”) deal from Genesys. Strahan also advised about products, pricing and offerings, and dissatisfied Genesys customers (Exhibits 127, 128, 131, 133).

         Approximately three weeks before departing Genesys to join Talkdesk, Hertel briefed Talkdesk CEO Paiva on the deal between Genesys and BOH. Hertel had knowledge of the details of the BOH deal because he had overseen it while employed by Genesys. Hertel disclosed Genesys' proposals, prices, and product details to Paiva in an effort to take the BOH business from Genesys (Exhibits 112, 121, 123, 124). Although various offers were extended, BOH decided not to accept Talkdesk's offer (Filing No. 183-5 at 6). Hertel copied onto a flash drive thousands of Genesys' documents, including sales reports and ...


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