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Elwood Staffing Services, Inc. v. KGS2 Group, LLC

United States District Court, District of Oregon, Portland Division

December 15, 2014

ELWOOD STAFFING SERVICES, INC., an Indiana Corporation, Plaintiff,
v.
KGS2 GROUP, LLC, an Oregon Limited Liability Company, d/b/a EXPRESS EMPLOYMENT PROFESSIONALS; THE STOLLER GROUP, INC., an Oregon Corporation; and SUSAN KONOPSKI, individually and in her capacity as an agent and officer of EXPRESS EMPLOYMENT PROFESSIONALS, INC., Defendants.

Krishna Balasubramani and Sarah B. Ewing, Sather, Byerly & Holloway, LLP, Portland, Oregon, for Plaintiff Elwood Staffing Services, Inc.

Lucas W. Reese, Garrett Hemann Robertson P.C., Salem, Oregon, for Defendants KGS2 Group, LLC, d/b/a Express Employment Professionals, and The Stoller Group, Inc.

Zachary J. Dablow, Zachary Dablow, Attorney at Law, Salem, Oregon, for Defendant Susan Konopski.

OPINION AND ORDER

DENNIS J. HUBEL United States Magistrate Judge

Plaintiff Elwood Staffing Services, Inc. (“Elwood”) brought this diversity action against Defendants KGS2 Group, LLC (“KGS2”), The Stoller Group, Inc. (“Stoller”) and Susan Konopski (“Konopski”) (collectively, “Defendants”) on August 6, 2014, alleging claims for injunctive relief, breach of contract, promissory estoppel, intentional interference with economic relations, breach of confidential relationship, and misappropriation of trade secrets. Plaintiff now moves, pursuant to Federal Rule of Civil Procedure (“Rule”) 65(a) and (b), for a temporary restraining order and an order to show cause why a preliminary injunction should not issue in this proceeding. For the reasons explained more fully below, Elwood’s motion (Docket No. 7) for a temporary restraining order and order to show cause why a preliminary injunction should not issue is DENIED.

I. FACTS AND PROCEDURAL HISTORY

Elwood is an Indiana Corporation that provides “temporary and direct staffing services to a variety of business client companies . . ., primarily in the industrial, clerical, professional, and technical industries.” (Compl. ¶ 7.) On February 15, 2013, Elwood acquired non-party SOS Staffing Services, Inc. (“SOS Staffing”) through a stock purchase. (Compl. ¶ 9; Basile Decl. ¶ 1.) SOS Staffing purportedly assigned its employees’ non-competition and non-solicitations agreements to Elwood as part of the acquisition, including the agreement Konopski, at the inception of her employment with SOS Staffing. (Compl. ¶¶ 8-9; Basile Decl. ¶ 1.)

The agreement signed by Konopski on May 24, 2006, provides in relevant part:

[T]o protect our proprietary, confidential and/or trade secret information, for the one-year period following the termination of your employment with us, for any reason or for cause, whether voluntary or involuntary, you agree:
a. either directly or indirectly, in person or through a third party or associate, not to call on, solicit or otherwise deal with any of our customers located within 60 miles of your territory, branch, or specific location at which you worked for us, or any other of our customers if you dealt with such customer while employed by us;
b. either directly or indirectly, in person or through a third party or associate, not to either solicit for employment, employ in anyway or cause any employee to be hired at your subsequent competing employer any of our employees (including, without limitation, temporary employees and/or staff employees) who were employed by us during the period of time you were employed by us; and
c. in order to further protect our confidential, proprietary and/or trade secret information, and as a condition of employment, continued employment with us and access to our proprietary and/or confidential information and trade secrets, not to work for, consult with or be employed by, directly or indirectly, any of our competitors at any location within 60 miles of your territory, branch, or specific location at which you worked while employed by us.
You agree that the term of this non-competition provision is reasonable and that the limited geographic scope of this non-competition provision does not preclude you from working in your given field, and you represent that you can seek employment with our competitors at a location outside of the limited geographic limitations of this non-competition provision. You agree that each of the foregoing restrictive covenants are reasonable and will not result in any undue hardship to you. You also agree that the confidential, proprietary and/or trade secret information obtained while working for us or our affiliated companies will not be used in any way to the detriment of our business, reputation or good standing at any time in the future.

(Basile Decl. Ex. A at 1-2.) Notably, the agreement purports to be legally binding on the employee, SOS Staffing, and SOS Staffing’s “subsidiaries or affiliates, ” but it is silent ...


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