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ATCO Manufacturing Co. v. Share Corp.

May 22, 2007

ATCO MANUFACTURING COMPANY, PLAINTIFF
v.
SHARE CORPORATION AND MARY LOU CALDWELL, DEFENDANTS



The opinion of the court was delivered by: James H. Jarvis United States District Judge

MEMORANDUM OPINION

This is a diversity action brought by plaintiff ATCO Manufacturing Company against its former employee, defendant Mary Lou Caldwell, and her present employer, defendant Share Corporation. The complaint raises claims of alleged wrongful use and misappropriation of ATCO's trade secrets and confidential information. Currently pending is defendants' motion to dismiss for failure to state a claim upon which relief can be granted pursuant to Rule 12(b)(6), Federal Rules of Civil Procedure [Court File #4]. For the reasons that follow, that motion will be granted in part and denied in part.

I. Factual Background

The following factual allegations are considered in the light most favorable to the plaintiff.

ATCO Manufacturing Company is a Georgia corporation which formerly employed defendant Mary Lou Caldwell. While ATCO's employee, Caldwell signed an employment agreement in which she agreed not to solicit ATCO's customers or disclose ATCO's trade secrets and confidential information following the termination of her employment. Her contract provided that, for a period of 24 months following the termination of her employment with ATCO for any reason, she would not, either directly or indirectly, solicit any customers with whom she had had material contact with a view to selling them any items competitive to a list of restricted products. Pursuant to the agreement, Caldwell had "material contact" with a customer if she sold at least $100 of "restricted products" and was entitled to a commission from the sale within the 12 month period immediately proceeding the date of termination. Caldwell also agreed not to misappropriate or disclose confidential information or trade secrets of ATCO.

On June 9, 2006, Caldwell terminated her employment with ATCO and thereafter became employed by defendant Share Corporation (Share). ATCO and Share have previously been in litigation regarding Share's alleged interference with ATCO's employee agreements. Specifically, ATCO sued Share in the United States District Court for the Western District of Virginia asserting similar claims arising out of Share's employment of another former ATCO employee. The prior litigation was settled pursuant to a settlement agreement in which Share agreed "not to solicit employees or independent contractors of ATCO, directly or indirectly, so as to hire them or to cause them to end their employment or their relationships with ATCO or to cause them to compete with ATCO in any manner, for a period of two years beginning March 4, 2005."

Plaintiff contends that Share has nonetheless continued to hire ATCO employees and has willfully and deliberately induced no fewer than six additional employees, including Caldwell, to breach their employment agreements and/or has aided and abetted the breach of these former employees' agreements with ATCO.

Plaintiff contends that Share and Caldwell have solicited ATCO customers in violation of ATCO's employment agreements by attempting to sell products competitive with ATCO's list of restricted products to ATCO customers. In addition, plaintiff claims that Share and Caldwell have used and misappropriated ATCO trade secrets and confidential information.

On January 25, 2007, ATCO filed its complaint in this action asserting the following claims:

Count I: Breach of contract against Caldwell based upon her breach of the non-solicitation and confidentiality provisions in her employment agreement;

Count II: Misappropriation of trade secrets against both Share and Caldwell pursuant to the Tennessee Uniform Trade Secrets Act (TUTSA), T.C.A. §§ 47-25-1701, et seq.; Count III: Conversion against Caldwell based on her failure to return confidential information and trade secrets; Count IV: Tortious interference with contract against Share based on its willful inducement of the breach of the non-solicitation and confidentiality provisions of ATCO's employment agreements by soliciting ATCO customers and misappropriating ATCO confidential information and trade secrets;

Count V: Breach of contract against Share based on its violation of its settlement agreement with ATCO with regard to soliciting and hiring ATCO's employees;

Count VI: Unfair competition and tortious interference with business relations against Share and Caldwell based upon the defendants' use of ATCO's trade secrets and confidential information and their solicitation of ATCO customers; and

Count VII: Unjust enrichment against Share and Caldwell based on the alleged willful and wrongful use of ATCO's trade ...


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