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Brinton Business Ventures, Inc. v. Searle

United States District Court, D. Oregon

March 30, 2017

BRINTON BUSINESS VENTURES, INC., dba Evergreen Vending, dba Vending Equipment Center, dba Northwest Coffee Services, dba Avanti Markets Northwest, Plaintiff,
v.
RICHARD SEARLE, Defendant.

          Bruce L. Campbell Nicholas H. Pyle Attorneys for Plaintiff

          Alex C. Trauman Jeremy G. Tolchin Attorneys for Defendant

          OPINION & ORDER

          MARCO A. HERNANDEZ United States District Judge

         Plaintiff Brinton Business Ventures, doing business as Evergreen Vending, Vending Equipment Center, Northwest Coffee Services, and Avanti Markets Northwest (hereinafter, “Brinton”), seeks to enjoin its former branch manager, Richard Searle, from competing against Brinton or soliciting Brinton's customers in violation of the terms of his non-competition agreement with Brinton. The parties conducted limited discovery in order to fully brief this motion. The Court held oral argument on March 15, 2017. Brinton's motion for a preliminary injunction is granted, subject to this Court's modifications as detailed below.

         BACKGROUND

         Brinton contracts with employers to install, service, maintain, and operate “micro markets” at workplaces around Oregon and Washington. Compl. ¶ 7, ECF 1. Micro markets are “unattended retail stores located directly on the premises of large employers, offering employees the opportunity to purchase food, beverages, and other items without leaving their workplace.” Id. Brinton's Portland, Oregon branch covers a territory stretching from Longview, Washington, south to Eugene, Oregon. Id. at ¶ 8.

         Mr. Searle accepted an offer to be Brinton's Portland, Oregon branch manager on January 8, 2012. Id. at ¶ 9. Upon accepting Brinton's employment offer, Mr. Searle said he would resign from his then-current employer on January 27, 2012, and would begin working for Brinton on January 30, 2012. Id.

         On January 13, 2012, Mr. Searle visited Brinton's Portland branch office. Id. at ¶ 10. As discussed in greater detail below, the parties disagree about whether Mr. Searle received a copy of a non-competition agreement on that day.

         At some point between January 13, 2012 and January 23, 2012, Mr. Searle contacted Brinton and asked if he could start working for Brinton sooner than planned. Id. at ¶ 11. Brinton agreed to Mr. Searle's request and permitted him to begin working on January 23, 2012. Id.

         On January 23, 2012, Mr. Searle arrived at Brinton's office and signed a NonCompetition Agreement (hereinafter, “Agreement”) that contained non-competition and non-solicitation provisions. Compl. Ex. A (“Agreement”), ECF 1-1. The non-competition provision prohibits Mr. Searle from competing with Brinton in a specified geographic area for two years after his employment ends with Brinton. Id. The non-solicitation provision prohibits Mr. Searle from soliciting, for two years after his employment ends with Brinton, any people who were Brinton's customers or prospective customers when Mr. Searle worked at Brinton. Id.

         On March 17, 2016, Mr. Searle sent an email to Jim Brinton, president of the company, and Bruce Brinton, vice-president of the company, stating that he wished to resign. Compl. ¶ 18. While still employed by Brinton, on March 22, 2016, Mr. Searle filed a registration with the Oregon Secretary of State to establish a new business named R Squared Markets & Vending Corporation. Id. at ¶ 19. The incorporators listed in the filing with the Secretary of State were Mr. Searle and Richard Corwin, a general manager at Brinton's Portland branch who worked under Mr. Searle's supervision. Id. On April 1, 2016, Mr. Searle's employment with Brinton ended. Id. at ¶ 21. Mr. Corwin continued to work for Brinton until June 15, 2016. Id. at ¶ 22.

         In late September of 2016, Brinton's largest customer in Oregon, Lam Research, cancelled its contract with Brinton. Id. at ¶ 24. Brinton believes that Mr. Searle “solicited the business of Lam Research and induced Lam Research to abandon its relationship with Brinton and to sign a contract with Mr. Searle's new business.” Id. at ¶ 25. Mr. Searle and his business are now operating one or more micro markets on Lam Research's Tualatin campus. Id. Brinton also believes that Mr. Searle has induced other customers, such as Nippon Dynowave, to terminate their relationship with Brinton and enter into business with Mr. Searle. Id. at ¶ 26. Lam Research and Nippon Dynowave were Brinton customers that Mr. Searle was responsible for during his time as Brinton branch manager. Id. at ¶¶ 24, 26.

         STANDARDS

         A party seeking a preliminary injunction “must establish that he is likely to succeed on the merits, that he is likely to suffer irreparable harm in the absence of preliminary relief, that the balance of equities tips in his favor, and that an injunction is in the public interest.” Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). The plaintiff “must establish that irreparable harm is likely, not just possible[.]” Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1131 (9th Cir. 2011) (emphasis in original). The court may apply a sliding scale test, under which “the elements of the preliminary injunction test are balanced, so that a stronger showing of one element may offset a weaker showing of another.” Id.

         Nevertheless, the party requesting a preliminary injunction must carry its burden of persuasion by a “clear showing” of the four required elements set forth above. Mazurek v. Armstrong, 520 U.S. 968, 972 (1997) (per curiam); Lopez v. Brewer, 680 F.3d 1068, 1072 (9th Cir. 2012) (a “preliminary injunction is an extraordinary and drastic remedy, one that should not be granted unless the movant, by a clear showing, carries the burden of persuasion”) (quoting Mazurek, 520 U.S. at 972) (emphasis in original).

         “Due to the urgency of obtaining a preliminary injunction at a point when there has been limited factual development, the rules of evidence do not apply strictly to preliminary injunction proceedings.” Herb Reed Enterprises, LLC v. Florida Entm't Mgmt., Inc., 736 F.3d 1239, 1250 n.5 (9th Cir. 2013). Therefore, in deciding a motion for a preliminary injunction, the Court has broad discretion to consider all arguments and evidence, including hearsay and other inadmissible evidence, declarations from interested parties, and arguments raised for the first time in a reply. Johnson v. Couturier, 572 F.3d 1067, 1083 (9th Cir. 2009); Lane v. Dep't of Interior, 523 F.3d 1128, 1140 (9th Cir. 2008).

         DISCUSSION

         The Court grants the motion for a preliminary injunction because Brinton establishes a likelihood of success on the merits and a likelihood of irreparable harm. The balance of the equities also tips somewhat in Brinton's favor. The public interest factor is neutral.

         I. Likelihood of Success on the Merits

         To succeed on its motion for a preliminary injunction, Brinton must demonstrate a likelihood of success on the merits of its claims. Brinton alleges that Mr. Searle breached the parties' non-competition and non-solicitation agreements.

         A. Non-Competition Agreement

         To be enforceable under Oregon law, a covenant not to compete must meet both the requirements of Oregon Revised Statute § (O.R.S.) 653.295 and Oregon's common law governing restraints on trade. Nike, Inc. v. McCarthy, 379 F.3d 576, 580-87 (9th Cir. 2004). Mr. Searle contends that the Agreement in this case is unenforceable because he voided the Agreement, as allowable under O.R.S. 653.295, and the Agreement is not reasonably limited.

         1. The non-competition provision of the Agreement is voidable.

         The parties sharply dispute whether the non-competition provision of the Agreement is voidable under Oregon law. It is undisputed that Brinton did not provide Mr. Searle with a copy of the Agreement two weeks before the first day of Mr. Searle's employment, as required by O.R.S. 653.295(1)(a)(A). However, Brinton contends that it provided the Agreement to Mr. Searle more than two weeks before the original agreed-upon employment start date. Thus, Brinton argues that it should ...


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