United States District Court, D. Colorado
A. BRIMMER United States District Judge.
matter is before the Court on Plaintiff's Amended Motion
and Supporting Memorandum for Preliminary Injunction [Docket
No. 25]. The Court has jurisdiction pursuant to 28 U.S.C.
§§ 1331 and 1367.
DTC Energy Group initiated this lawsuit on July 14, 2017.
Docket No. 1. On the same day, plaintiff moved for a
temporary restraining order and preliminary injunction based
on the alleged misappropriation of plaintiff's trade
secrets by defendants Adam Hirschfeld, Joseph Galban, and
Ally Consulting, LLC. Docket No. 4. After a hearing on the
motion on August 1, 2017, the Court denied plaintiff's
request for a temporary restraining order, finding that
plaintiff had failed to demonstrate a likelihood of success
on the merits of its misappropriation claims. See
Docket No. 17 at 69. On September 13, 2017, plaintiff filed
an amended complaint and an amended motion for a preliminary
injunction. Docket Nos. 24, 25. Plaintiff's amended
motion seeks injunctive relief against defendants Adam
Hirschfeld, Joseph Galban, and Ally Consulting, LLC based on
four claims in the amended complaint: (1) misappropriation of
trade secrets under the federal Defend Trade Secrets Act
(“DTSA”), 18 U.S.C. § 1831 et seq.,
and the Colorado Uniform Trade Secrets Act
(“CUTSA”), Colo. Rev. Stat § 7-74-101 et
seq.; (2) breach of contract; (3) breach of the duty of
loyalty; and (4) unfair competition. See Docket No.
25 at 2, 6-16. After the Court denied Mr. Hirschfeld's
Motion to Compel Arbitration and Stay Proceedings [Docket No.
26] on January 4, 2018, see Docket No. 37,
defendants filed responses to plaintiff's amended motion
for a preliminary injunction. Docket Nos. 39, 42. On January
30, 2018, the Court held an evidentiary hearing on
plaintiff's motion. Docket No. 56.
FINDINGS OF FACT
Court makes the following findings of fact based on the
parties' filings and the evidence presented at the
January 30, 2018 evidentiary hearing:
Plaintiff DTC Energy Group, Inc. is a Colorado corporation
that provides consulting and staffing services for onshore
oil and gas companies in the United States. See
Docket No. 24 at 3, ¶ 7. The focus of DTC's business
is the placement of supervisory personnel, including site
supervisors, operations engineers, and project managers, with
oil and gas producers. Bob Sylar and Luke Clausen co-owned
DTC until May 1, 2017, when Luke Clausen bought Mr.
Sylar's equity interest to become sole owner of the
Defendant Ally Consulting, LLC, is a Wyoming limited
liability company that provides consulting and staffing
services for the oil and gas industry. Docket No. 24 at 3,
¶ 10. Ally was formerly known as Wyodak Staffing
Services. In 2015, Wyodak was co-owned by Robert Dutton and
Joe Johnson. Mr. Clausen testified that the focus of
Wyodak's business until at least 2016 was the staffing of
directional drillers. Wyodak underwent a name change at some
point in late 2015 or early 2016 to become Ally Consulting.
and gas staffing firms work primarily with two groups:
consultants and customers. “Consultants” are
temporary employees hired by the oil and gas companies to
work at well sites. “Customers” are the oil and
gas companies who hire the consultants. The identities of
consultants and customers are generally known by the oil and
gas companies. In addition, their identities are readily
available through various online sources. James Colvin, the
owner/president of Energy First Consulting, testified that
there are no exclusivity agreements binding consultants and
both consultants and customers often work with multiple
staffing firms at any given time.
2013, DTC hired defendant Adam Hirschfeld as a sales
associate. Mr. Hirschfeld was ultimately promoted to the
position of business development manager. During his
employment with DTC, Mr. Hirschfeld was responsible for
assessing the staffing needs of oil and gas companies and
identifying appropriate candidates to fill those roles. Mr.
Hirschfeld's day-to-day work consisted of recruiting
consultants and building and maintaining relationships with
oil and gas companies.
Hirschfeld entered into an employment contract with DTC on
January 1, 2015. Exhibit 2. Section 11 of contract is a
confidentiality provision, which states:
Employee covenants and agrees that he will not at any time
during or after the end of the [employment] Term, directly or
indirectly, use for his own account, or disclose to any
person, firm or corporation, other than authorized employees
of the Company . . . Confidential Information (as hereinafter
defined) of the Company. As used herein, “Confidential
Information” of the Company means information about the
Company of any kind, nature or description, including but not
limited to, any proprietary information, trade secrets, trade
values, data, formulae, supplier, client and customer lists
or requirements, price lists or pricing structures, marketing
and sales information, business plans or dealings and
financial information and plans as well as all papers,
resumes and records (including computer records) that are
disclosed to or otherwise known to Employee as a direct or
indirect consequence of Employee's employment with the
Company, which information is not generally known to the
public or in the businesses in which the Company is engaged.
Confidential information also includes any information
furnished to the Company by a third party with restrictions
on its use or further disclosure.
Exhibit 2 at 4, ¶ 11. The contract also contains a
nonsolicitation provision. Subsection
that provision states:
[W]hile employed by the Company, and for a one-year period
thereafter, Employee shall not, directly or indirectly,
solicit or influence or attempt to solicit or influence any
current customer, client, vendor or supplier of the Company
or any of its affiliates or subsidiaries to divert their
business to any Competitor . . . of the Company . . . or
otherwise terminate its relationship with the Company for any
purpose or no purpose, provided, however, that this Section
12 shall not be applicable . . . in the event of a
termination of this agreement by the Employee without Good
Reason but because there has been a change in the current
equity ownership of the Company.
Id. at 5, ¶ 12(a). Subsection (b) further
Employee agrees that, while employed by the Company and for a
one-year period thereafter, Employee will not, directly or
indirectly, induce, solicit or recruit any employee or
consultant of the Company or its subsidiaries or affiliates
for the purpose of (A) being employed by Employee or by any
Competitor of the Company or (B) interfering with or
terminating his or her employment relationship with the
Company for any purpose or no purpose.
Id., ¶ 12(b)(ii). In the event of a breach by
the employee, the contract states that DTC shall have the
“right and remedy to have each and every one of the
covenants in this Agreement specifically enforced and the
right and remedy to obtain injunctive relief, it being agreed
that any breach or threatened breach of any of the
confidentiality, nonsolicitation, or other restrictive
covenants and agreements contained herein would cause
irreparable injury to the Company and that money damages
would not provide an adequate remedy at law.”
Id. at 5-6, ¶ 13(a).
November 2014, DTC hired defendant Joseph Galban as a staff
accountant. There is no evidence that Mr. Galban signed an
employment agreement with DTC.
Hirschfeld and Mr. Galban resigned from DTC on May 31, 2017
and went to work for Ally. Mr. Hirschfeld currently serves as
Ally's head of business development; Mr. Galban works for