This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
IN COURT OF APPEALS
United Products Corporation of America, Inc.,
Brenton R. Cederstrom, et al.,
Filed June 6, 2006
Ramsey County District Court
File No. C0-05-4956
David Bradley Olsen, Matthew H. Morgan, Henson & Efron, P.A., Suite 1800, 220 South Sixth Street, Minneapolis, Minnesota 55402-4503 (for appellant)
Joseph M. Sokolowski, Lindsay J. Zamzow, Parsinen Kaplan Rosberg & Gotlieb, P.A., 100 South Fifth Street, Suite 1100, Minneapolis, Minnesota 55402 (for respondents)
Considered and decided by Hudson, Presiding Judge; Klaphake, Judge; and Crippen, Judge.*
U N P U B L I S H E D O P I N I O N
On appeal from a district court order denying temporary injunctive relief, appellant argues that the district court abused its discretion by (a) refusing to enjoin respondents from violating an employment agreement between appellant and respondents, and (b) refusing to enjoin respondents from violating the Uniform Trade Secrets Act and their respective common-law duties of confidentiality. Because appellant has not demonstrated a likelihood of success on the merits, and because appellant has not demonstrated a threat of irreparable harm, we affirm.
United Products Corporation of America, Inc. (UPC) is a
As an outside salesperson, Cederstrom had access to UPC’s confidential financial information, including customer lists; customer financial information and credit histories; and UPC’s pricing information, including rebates, discounts, vendor agreements, and sales strategies. Cederstrom regularly received sales and customer reports and had access to similar information outside of his territory through UPC’s computer network. Cederstrom also attended UPC company-wide sales meetings during which the salespersons from each UPC branch identified the top ten customers in their territories and developed long-term sales strategies. While employed at UPC, Cederstrom had an expense account for entertaining and developing relationships with UPC customers. According to UPC, Cederstrom’s knowledge of UPC’s confidential financial information and customer information could be used to improve a competitor’s proposals and alert a competitor to previously unknown opportunities.
In an effort to keep the information described above confidential, UPC requires all employees with access to confidential information to sign employment agreements containing confidentiality and non-competition provisions. Cederstrom signed such an agreement on April 11, 2001, the date of his hire. The agreement prohibits an employee from being “[e]mployed by . . . or in any way providing services to or for the benefit of [UPC’s] Competitors” for 18 months after leaving UPC’s employment. The agreement also prohibits an employee from soliciting orders from customers who dealt with UPC during the 12-month period before the employee’s resignation, and from disclosing confidential information.
Cederstrom resigned his employment
with UPC on May 4, 2005, and began working for respondent Alcoa Home Exteriors,
Inc. (Alcoa). Alcoa is a manufacturer of
exterior building products, including vinyl and aluminum siding. Alcoa sells its products in
Alcoa structured Cederstrom’s job responsibilities and territory to address the non-competition, non-solicitation, and confidentiality provisions of Cederstrom’s agreement with UPC. Alcoa directed Cederstrom not to use or disclose UPC confidential information and to refrain from contacting any UPC customers with which Cederstrom worked within the last 12 months of his employment with UPC. Cederstrom has no authority or policy role in setting Alcoa’s manufacturing price to distributors or in setting discounts and rebates made available to Alcoa distributors.
According to Cederstrom, while he was at UPC he did not have access to information about manufacturer costs or charges. Additionally, Cederstrom contends that his principal focus at UPC was his own customer base, and, consequently, he did not access broader, UPC-wide customer information. Cederstrom examined only annual UPC sales and planning information to compare it to his own territory. And to the extent that he did receive information related to UPC-wide and other UPC branch performance, Cederstrom contends that he did not keep that information and does not remember the contents. Cederstrom did not take any UPC data or information upon leaving UPC. Further, according to Alcoa’s affidavits, Alcoa does not seek or use confidential information from other manufacturers or their distributors in the pursuit of Alcoa’s business interests.
On May 17, 2005, UPC filed this action seeking temporary and permanent injunctive relief and damages against Cederstrom and Alcoa for (1) breach of contract, (2) tortious interference with contract; (3) violations of the Minnesota Trade Secrets Act; (4) common-law misappropriation of trade secrets; and (5) breach of common-law duties of confidentiality. In addition, UPC moved the district court under Minn. R. Civ. P. 65.01 and 65.02 for a temporary restraining order and temporary injunction enjoining Cederstrom and Alcoa from continuing to violate the non-competition, non-solicitation, and confidentiality provisions of Cederstrom’s employment agreement with UPC.
The district court denied UPC’s motion for a temporary injunction on August 16, 2005. The district court found that Cederstrom was in violation of the explicit terms of the non-compete provision of his employment agreement, but concluded that the restrictions in the agreement were broader than necessary to protect UPC’s legitimate business interests. In addition, the district court found no evidence supporting the notion that Cederstrom either has disclosed, or intends to disclose, UPC confidential information. This appeal follows.
D E C I S I O N
district court may grant a temporary injunction if affidavits, deposition
testimony, or oral testimony demonstrates sufficient grounds.
A temporary injunction is an
extraordinary equitable remedy intended to preserve the status quo pending
adjudication on the merits. Miller v. Foley, 317 N.W.2d 710, 712 (
UPC first argues that the district court committed reversible error in failing to enjoin Cederstrom and Alcoa from violating the non-compete agreement. The district court determined that Cederstrom breached the non-compete provision of that agreement as written by taking the position with Alcoa, but concluded that the agreement was likely unenforceable. We agree.
non-compete agreement here prohibited Cederstrom’s employment with a competitor
for 18 months following his resignation.
In determining the reasonableness of a temporal restriction, this court
examines the nature of Cederstrom’s work, the time necessary for UPC to train a
new employee, and the time necessary for UPC’s customers to adjust to the new
employee. See Overholt Crop Ins. Serv.
Co. v. Bredeson, 437 N.W.2d 698, 703 (
With respect to the geographic limitation, “[c]ourts generally uphold geographic limitations when they are limited to areas necessary to protect the employer’s interest.” Overholt, 437 N.W.2d at 703 (upholding as reasonable a non-compete agreement limited to areas in which the employee actually worked). Here, the agreement prohibits Cederstrom from working for any UPC competitor that sells siding in Cederstrom’s former territory, even if Cederstrom is not active in his former territory.
Construing the facts in respondents’ favor, the district court did not abuse its discretion in refusing to enjoin Cederstrom from violating the non-compete agreement.
UPC next argues that the district court committed reversible error by failing to enjoin Cederstrom and Alcoa from violating the non-solicitation and confidentiality provisions of the employment agreement.
party seeking the injunction must establish that the injunction is necessary to
prevent irreparable harm and that there is no adequate legal remedy. Cherne
Indus., Inc., 278 N.W.2d at 92. The
party opposing the injunction must only show substantial harm to bar it. Yager
v. Thomson, 352 N.W.2d 71, 75 (
district court did not abuse its discretion by refusing to enjoin
respondents. There is no
Cederstrom likely retains some information that gives him insight into UPC
customer preferences, UPC’s argument does have merit. But
Appellant next argues that the district court abused its discretion by refusing to enjoin Cederstrom and Alcoa from violating the Uniform Trade Secrets Act (UTSA) and their common-law duties of confidentiality.
The UTSA, Minn. Stat. §§ 325C.01–.08 (2004), articulates
and clarifies much of the common law concerning trade secrets and confidential
information, allowing the protection of certain types of information through an
action for misappropriation. Electro-Craft Corp. v. Controlled Motion,
Inc., 332 N.W.2d 890, 897–98 (
The UPC affiants aver that
Cederstrom had access to UPC trade secrets including: (1) customer lists,
credit histories, and buying habits; (2) UPC pricing information, rebate
programs, mark-ups, and margins; and (3) UPC long-term sales strategies. We are not convinced that the general categories
of information articulated by UPC are sufficiently detailed to permit
characterization as a trade secret. See In re Rahr Malting Co., 632 N.W.2d 572, 576 (
Even if UPC had provided
sufficient detail to characterize the information as trade secrets, UPC has not
demonstrated the requisite high probability of inevitable disclosure. To warrant an injunction, the moving party
must demonstrate something more than a risk of irreparable harm. Int’l
Bus. Mach. Corp., 941 F. Supp. at 101.
The moving party may not use an injunction “simply to eliminate a
possibility of a remote future injury, or a future invasion of rights,” and
“injunctions will not be issued merely to allay the fears and apprehensions or
to soothe the anxieties of the parties.”
* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.